Things you need to know regarding the Tenant Fees Act 2019
3rd February 2020
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There has been a substantial change to the way that agents and landlords will be able to apply fees to their tenants. This change is a as a result of the Tenant Fees Act 2019 which has been in force since 1 June 2019. The main effects of this legislation are that there is no longer an option for letting fees, as well as caps placed on security deposits. This legislation will apply to all new tenants and current tenants renewing their tenancy. However, as the average length of tenancy is around 3-5 and a half years there should not be an instant dramatic affect to many landlords and agents. Yet it should be noted from 01 June 2020 this act will apply to all tenants.

The government has made it clear that they want more protection for the tenant, due to the concern that parts of the industry were overcharging tenants at every given opportunity. As a result, landlords and agents can only charge the costs they have incurred, an example being if it costs £30 to change a fire alarm, this is the fee that is charged. This issue is particularly prevalent amongst students being overcharged for minor defects to the property and processing charges from agents. If the landlord or agent does not abide to this rule, then the additional fee will amount to an illegal fee. The consequence of this is that the section 21 notice is no longer valid. The consequences do not end here but extend to a fine ranging from £5,000 to £30,000 for reoffenders. There is more information on what fees can be charged on ‘The Property Ombudsman, Code of Practice for Residential Letting Agents (England)’, section 12.

As noted, the updated legislation incurs a substantial effect on the landlord and agents. This is evident through the caps placed on security deposit. The current system operates by taking one weeks holding deposit which will be fully refundable to the tenant if they are to move in. The only way a landlord or agent is able to keep this deposit as a fee is if the tenant had made a false statement, which means they are in fact not a suitable candidate for the property. In addition, this deposit will need to be deducted from the moving fees. The maximum deposit obtainable from the tenant is now six weeks rent. Therefore, the tenant will only need to provide an additional five weeks rent. 

It is evident from the information provided that the consequences of not meeting the standards set by the new legislation could be severe. As a result of the consequences that landlords and agents could face, it is important that this substantial change in rules are noted and applied. However, there are also several concerns that this new legislation brings. Firstly, it could have an effect on letting agents who are known for adding additional fees, resulting in casualties of many businesses. Secondly, despite the government’s efforts to support the tenant, prices of rent may rise to make up for loss of fees.

 

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Ian Henery

Member since: 4th February 2019

Presenter Black Country Radio & Black Country Xtra

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