The new Tenant Fees Act comes into force on the 1st June 2019. So what is it? And how will it affect landlords and tenants?
What is the new Tenant Fees Act?
In a bid to reduce the charges that tenants pay from the start of the renting process, the new Tenant Fees Act caps the amount that renters can be charged for their deposits and bans letting fees altogether. Specifically it requires that:
- Tenancy Deposits must not exceed the equivalent of five weeks' rent (unless the annual rent exceeds £50,000 in which case deposits are capped at six weeks’ rent).
- The amount that can be charged for a change to a tenancy will be capped at £50 unless the landlord demonstrates that greater costs were incurred.
- Holding Deposits will be capped at no more than one week’s rent.
Alongside rent and deposits, agents and landlords will only be permitted to charge tenants fees associated with:
- A change or early termination of a tenancy when requested by the tenant.
- Utilities, communication services and Council Tax.
- Payments arising from a default by the tenant where they have had to replace keys or a respective security device, or a charge for late rent payment (not exceeding 3% above the bank of England base rate).
How will it affect landlords?
Landlords (and Agents) will only be able to charge for 'reasonably incurred costs' and will have to provide evidence of the costs before they can be charged to a tenant.
Any landlord (or Agent) ignoring the ban on letting fees risk facing a fine of £5000.
How will it affect tenants?
The changes are good new for tenants. Currently tenants face a range of charges such as admin fees, tenancy renewal fees, referencing fees and credit check fees to name but a few.
From the 1st June 2019, landlords will be responsible for meeting the costs associated with these fees. The only charges that can be made will be:
- A refundable holding deposit, capped at one week's rent
- The weekly or monthly agreed rent
- Utilities and council tax
- A refundable deposit, capped at six weeks rent.
- Changes to the tenancy agreement, capped at £50, unless the landlord can proves costs are higher than this.
- Early termination of the tenancy, requested by the tenant
- Defaults by the tenant. Provided such fees are 'reasonable'.
All other fees will be banned.