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Renting a Property: what’s the cost?

Posted by Hilary Messer

29-10-2019

On 1 June 2019 the Tenant Fees Act 2019 (TFA) came into force. This was to introduce a ban on unfair letting fees paid by tenants for agents selected and appointed by landlords. The government said the TFA would incentivise letting agents to compete for landlords’ business, resulting in a better and more transparent service for everyone.

As a result there is now a ban on charging fees to tenants, including admin and agency fees. The TFA applies to assured shorthold tenancies, houses in multiple occupation and licences to occupy.

Are agents’ fees published?

Section 83 of the Consumer Rights Act 2015 now requires letting agents to publish details of their fees.

What payments are actually banned?

Everything except payment for

No tenant should be paying for taking references or credit checks or check-in charges or inventory or other admin fees. If their landlord requires them to pay nonetheless, there are penalties.

Are there any limits on what a landlord can charge now?

Yes. The maximum deposit a tenant can be asked to pay is 5 weeks where rent is less than £50,000 pa. The maximum holding deposit (to secure a property by a deadline) is 1 week’s rent. Where parties enter a tenancy agreement by the deadline the holding deposit must be returned to the tenant, or offset against rent or deposit. It must be returned if no tenancy agreement is entered by the deadline, unless the lack of agreement is the tenant’s fault e.g. no right to rent, tenant pulls out.  Changes to the agreement are already being reported as a ‘loophole’ to recoup lost fees, for example charging to allow pets, then increasing the rent as well. For rent over 14 days late up to 3% over the Bank of England base rate can be charged as interest. There can be no charge for chasing rent. For lost keys only a reasonable amount can be charged, which means limited to what is actually costs the landlord to replace.

What if a landlord still charges a tenant anyway?

The TFA creates a civil offence. Enforcement is by Trading Standards. For a first offence the fine is up to £5,000.  A repeat offence within 5 years is a criminal offence. The fine for a second offence is up to £30,000. Alternately the landlord could be prosecuted and ultimately banned from renting out property. In addition the landlord has to repay the tenant the banned payment plus interest.

Are there any other consequences of taking a banned payment?

If a landlord requires the tenant to make a banned payment, or takes a bigger deposit than is allowed, the landlord cannot later serve a valid 21 notice. That means the landlord cannot get the tenant out via the usual notice to quit.


Hilary Messer

Senior Associate
Commercial Disputes
Property Disputes

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