Tenant Fee Act 2019: what this means for tenants and landlords
While you were probably out enjoying the first day of summer on Saturday, the Tenant Fee Act 2019 (‘the Act’) came into force. The Act functions to crack down on unexpected fees from landlords and letting agents, and will impose hefty fines on anyone who fails to comply.
If you’re currently renting, or you’ve been thinking about entering into a tenancy agreement, you can breathe a sigh of relief. Some charges beyond your rent will still apply, but a lot more financial protections are now in place for tenants. Below QualitySolicitors looks at who is affected, what exactly the Act means, and what further implications there are for end of tenancy evictions.
Who does the Tenant Fee Act 2019 affect?
If you’ve signed a new private property lease or renewed your existing lease on or after Saturday 1 June, then the Act will protect you as a tenant.
If you have an existing statutory or contractual periodic tenancy (generally month-to-month), though, you will not experience the effects of the Act until 1 June 2020 – when it will apply to all pre-existing and new tenancies.
What exactly has changed for tenants?
Rather than setting out all of the letting fees that are now banned, the Act sets out what is considered a ‘permitted payment’ – but it allows us to read between the lines and determine where the law stands on charges already being fielded by tenants. Below are some of the biggest changes to come from the Act.
Landlords and lettings agents are no longer able to charge you for:
- Viewing the property
- Reference and guarantor checks
- Credit checks
- Administrative costs involved in setting up the tenancy (such as drafting the agreement)
- Inventory preparation or inventory checks at the end of the tenancy
Additionally, some of the permitted charges now have caps:
- Holding deposits are now capped at one week’s rent
- Deposits can be no more than five weeks’ rent (where the annual rent costs £50,000 or less) or six weeks’ rent (for a higher value property)
- Varying a tenancy agreement can cost no more than £50 (unless there is proof the landlord incurred a greater expense, in which case they can charge more but this must be a ‘reasonable’ amount)
- Late rental payments can incur a penalty fee, but this must not be more than 3% of the Bank of England’s annual percentage rate for each day the payment is outstanding
- Moving out early will incur a capped fee
If you’ve ever been charged for domestic or professional cleaning, then you can now request hard proof of the actual cost involved, and whether that matches what you’ve been asked to pay.
What does this mean for landlords and letting agents?
Any landlords or letting agents who have charged tenants for anything other than a permitted payment, or who have asked for an unlawful holding deposit, could face fines of up to £5,000. In the first instance, landlords and letting agents will have up to 28 days to pay back the full amount of any unlawfully charged fees. If there are repeat offences, then the fines could drastically increase up to £30,000 and also result in a criminal offence.
The other key change to note is the impact the Act has on ending tenancies after the fixed term. If you’re a landlord and would not like to renew the tenancy, you can issue a section 21 notice, which is the ‘no fault’ route where you are not required to give a reason. You can only validly issue this notice, though, if you have not acted unlawfully under the new Act. If you have not paid back monies owed to the tenant, then they will still have the right of tenancy.
It’s a good idea for landlords and letting agents to have a ‘tenancy agreement health check’ by a property solicitor to ensure they are compliant under the new Act and are not at risk of heavy fines.
Why is there a need for these changes?
The Act has come into force as a means of protecting tenants from unexpected and unfair letting fees that can contribute to housing unaffordability and it is set to have a considerable impact on the private rental sector.
The charges under fire relate to the range of administrative fees landlords and letting agents may have charged tenants, including start or end of tenancy charges, or even overcharging during the course of the tenancy, such as for minor damage or to replace necessary items like a smoke alarm.
These changes reflect an attempt to shift and restore some of the balance between landlords and tenants, with a focus on improving housing affordability and stability for tenants. Moving house can be a particularly expensive period, with the first month’s rent needed, a deposit, and any additional letting fees only adding to this. Landlords have said, though, that these changes will result in less choice and a rent rise.
It is still estimated, though, that the new Act will save private renters up to £70 per household, and more broadly across England the government estimates a £240 million saving for tenants.
If you’re a tenant, landlord or letting agent who has questions about what the Tenant Fee Act 2019 means for your current or future tenancy arrangements, get in touch with QualitySolicitors on 08082747557.
 Kevin Peachey, ‘Lettings fee ban brings cheer to tenants’, BBC News (online, 1 June 2019) https://www.bbc.co.uk/news/business-48474218
 ‘Tenant Fees Act 2019: the key changes for tenants, landlords and estate agents’, Homes & Property (3 June 2019) https://www.homesandproperty.co.uk/property-news/renting/tenant-fees-act-2019-the-key-changes-for-tenants-landlords-and-estate-agents-a130916.html