Coming into force on 1 June 2019, the Tenants Fees Act 2019 (the Act), is the Government’s line of attack in banning letting fees and capping deposits in England. Its aim is to reduce the costs tenants have to pay at the commencement and during the lifetime of a tenancy. It allows a tenant to understand the costs of renting a particular property upfront.
The Act applies to all assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England.
The Act will prevent landlords passing on payments such as, but not limited to, inventory fees, service fees, credit checks, fees for professional cleaning and fees for missed contractor appointments.
The Act sets out seven permitted payments:-
Any payment which is not covered by the Act as above is prohibited. In addition, landlords are prevented from including a term in tenancy agreements that require payment of fees intended to act as a penalty.
However, the Act does not prevent landlords recovering damages for breach of the tenancy, nor does it prevent a landlord from recovering associated legal costs or from making deductions from a secured deposit following a breach, or for damage beyond reasonable wear and tear.
The Act will be introduced as follows:-
The Act will be enforced by local authorities and, where applicable, Trading Standards.
Landlords who have charged any prohibited payments will be prevented from recovering possession through section 21 of the Housing Act 1988, known as ‘no fault evictions’, until payment has been refunded.
Tenants can recover unlawfully charged fees through the court.
A breach of the Act will be a civil offence and comes with a fine of up to £30,000.00. A subsequent breach within five years will be a criminal offence, the penalty of which is a banning order offence under the Housing and Planning Act 2016, and includes an unlimited fine.
Naturally, some landlords will be concerned that certain charges cannot be offset, however, the introduction of the Act is part of the Government’s overhaul of the private rented sector.
Landlords should double-check tenancy agreements and work with their letting agents to understand what permitted payments can be charged. This is to avoid the risk of being fined or banned from renting property in the future.
If a landlord, or tenant, is unsure of its obligations, it should seek independent legal advice.