Tenant Fees Act 2019 obliges landlords and agents to follow new rules on residential tenancy payments
The Tenant Fees Act 2019 (TFA 2019) came into force on 1 June 2019 and restricts the type, and amount of payments that landlords and letting agents can require from tenants of most private rented accommodation – ie. assured shorthold tenancies (ASTs) (other than social housing tenancies or long leases), student accommodation and licences to occupy (also capturing those living in houses in multiple occupation), thereby introducing protection for those residential tenants.The aim of the TFA 2019 is to reduce the costs that tenants can face at the beginning of, and throughout, a tenancy. The provisions apply immediately to the grant of new tenancies, with a grace period of one year for existing tenancies.
The scope of the TFA 2019 now restricts the amount:
- of payments that landlords and letting agents can require from tenants;
- that can be taken as a tenancy deposit;
- that can be taken as a holding deposit and sets a timetable for dealing with repayment.
The TFA 2019 prohibits all payments in connection with a tenancy, except payments which are expressly permitted (these are listed in Schedule 1 of TFA 2019). Landlords and letting agents are prohibited from requiring tenants (and anyone acting on a tenant’s behalf or guaranteeing the tenant’s rent) to make any payment which is not expressly permitted.
Permitted payments include:
- Rent;
- Council tax for the property;
- Utilities bills;
- Television licence payments;
- A tenancy deposit which is capped at five weeks’ rent where the annual rent is less than £50,000, and six weeks’ rent where the annual rent is £50,000 or more;
- A holding deposit (paid to reserve a property before the start of a tenancy) which is capped at one week’s rent;
- A payment in event of default (ie a lost key or security device that provides entry to the accommodation), or arrears of rent of more than 14 days;
- A payment (capped at £50, or (if higher) the reasonable costs of the landlord or agent, to whom the payment is made) in consideration of a variation, assignment or novation of a tenancy at the tenant’s request;
- A payment to a landlord or letting agent in consideration of the early termination of the tenancy at the tenant’s request;
Conversely then, prohibited payments will include a tenancy deposit in excess of that described above, tenancy set-up fees, viewing fees, credit-check fees, an inventory check instigated by the landlord and check-out fees.
It is usually the local authority trading standards team which is the enforcement authority for the prohibitions applying to landlords and letting agents and repayment obligations in relation to holding deposits, although the TFA states that the Secretary of State may appoint a lead enforcement authority to oversee or enforce operation of the TFA 2019 and other letting agency legislation and to issue guidance, information and advice. An enforcement authority can impose a financial penalty of up to £5,000 where it is satisfied beyond reasonable doubt that there has been a breach of the prohibitions or repayment obligations and/or the requirements relating to holding deposits.
Financial penalties can be much higher (up to £30,000) where an offence has been committed and there may still be recourse to prosecution, where necessary. Enforcement is dealt with under Schedule 3 TFA 2019.
Further reading can be found here: https://www.gov.uk/government/collections/tenant-fees-act
Fisher Jones Greenwood have Landlord & Tenant experts who can help you with the scenarios discussed in this blog, please contact us on 01206 700113 or email [email protected]