New legislation designed to ban landlords and letting agents from charging certain fees to tenants comes into force on June 1, 2019 and landlords need to be aware of the changes to avoid falling foul of the rules.
The Tenant Fees Act 2019 will put a stop to the practice of landlords and agents passing on letting fees to tenants of residential properties.
This has been brought in as a result of criticism from tenants of the often large ‘admin fees’ charged by some landlords and agents to enter into an assured shorthold tenancy for a property.
The new law will put a ban on any fees charged to the tenant which do not fall under the ‘permitted payments’ list. The charges which are permitted include:
- Deposits (although this is capped)
- Payments on a tenant’s default
- Fee for a variation, assignment or novation of the tenancy
- Payment on early termination of the tenancy
- Council tax
- Utilities (electricity, gas, other fuel, water or sewerage)
- TV licence, phone, internet and cable or satellite TV charges
Therefore any charges levied on the tenant which do not fall under these categories are a prohibited payment and should not be included within the tenancy agreement provisions.
Penalties for breaches of the rules include fines, a requirement to repay the unlawful charges back to the tenant, and restrictions on the ability to serve eviction notices to end the tenancy.
Whilst it will most likely be the previously commonplace ‘admin fees’ charged by some letting agents which will constitute a prohibited payment, it is still possible that landlords who self-manage their properties will encounter difficulties.
Recently I advised a landlord on granting a new tenancy who was seeking to pass on charges he incurred in relation to his purchase of the property to his tenant.
These charges did not fall under the permitted payments and would have been unlawful.
The rules also apply to existing tenancies entered into prior to the new law coming into force on 1 June 2019 (with a one year grace period to now comply). Landlords may be wise to review their tenancy agreements now to ensure they comply with the changes.