It’s been quite a while now since the Tenant Fees Act came into force in June 2019. That time has flown by and we’re sure the rules have now become a standard part of everyday processes, but how much do you really remember?
If you’d like to test yourself, or just like reading A LOT, you can find the guidance here. For now, we’re just going to highlight some of the headlines.
What can you ask a tenant to pay? Otherwise known as permitted payments.
The rent
💷 A refundable tenancy deposit, capped at five weeks rent
💷 A refundable holding deposit (see later!) capped at one week rent
💷 Payments to change the tenancy, capped at £50 or ‘reasonable’ costs
💷 Payments associated with early termination of the tenancy (see later)
💷 Payment for utilities, communication services, TV licence and council tax
💷 A default fee for late payment of rent and replacement of a lost key, where required under the tenancy agreement
If you take anything else from the tenant, this is called a prohibited payment and is outlawed by the ban. This will prevent you or the landlord from issuing a Section 21 until you’ve paid back the unlawfully charged money.
A breach of the legislation is also punishable with a fine of up to £5000, however if another instance occurs within 5 years it’s considered a criminal offence for which local authorities can impose a penalty of up to £30,000 as an alternative to prosecution, or you can take your chances where a conviction can lead to a banning order and an unlimited fine.
There are a couple of items we felt is prudent to expand on a little further:
Holding deposits can be taken from the tenant to reserve a property. These must be limited to one week rent (monthly rent x 12 /52) where this comes out at an un-even figure our advice, which also goes for deposits, is to ROUND DOWN!! This is very important as even a 1p round up can cause some serious issues later.
The holding deposit should be returned within seven days of the tenancy starting. The most common way of dealing with this is to deduct it from the initial monies needed for move in.
Where the tenancy doesn’t go ahead as a direct result of the applicant and you are able to retain the holding deposit, you must:
🤥 Be able to prove the tenant provided false or misleading information
🆔 Fails a right to rent check
🏃♂️ Withdraws from the property for their own reasons, i.e. the landlord or agent haven’t acted unreasonably.
🚷 Fails to take all reasonable steps to enter into a tenancy where the landlord and agent have done all reasonably expected to do so
📝 Set out, in writing, why you are retaining the holding deposit within 7 days of deciding not to let to them, citing one of the above.
Early termination is a little less common, however still prominent for those in property management. The government guidance does not specify exactly what can be charged, however in our experience this is any cost the landlord or agent would not expect to incur at this time. For example:
📜 Administration costs for setting up the new tenancy and putting a new agreement in place
📲 Marketing costs
🕵️♂️ Referencing fees
📝 Inventory costs, both checking out and checking in from the inventory
💷 Fees in relation to the deposit holding (where applicable)
💰 Rent until the new tenancy commences
Ok, not so much of a quick refresher, but hopefully useful! What are your tips to remain compliant with the Tenant Fees Act?