The Tenant Fees Act is the government’s new regulations covering the banning of many letting fees paid by tenants and the capping of tenancy deposits in England. This follows similar regulations in Scotland.
Tenants will be able to know clearly what it will cost them to rent a given property without having to worry about any extra hidden costs. This will ensure that the fees charged reflect the real value of the service provided.
The ban on tenant fees comes into force on 1st June 2019. It will initially apply only to new tenancies or renewal of existing tenancies which occur after this date.
The aim of the Act is to reduce the costs inherent in moving home. At present, a tenant must have a large sum of money available for rent, another for the deposit and a third for the additional fees, and this burden reduces people’s mobility and harms the sector as a whole. The Act is one of a group of measures designed to redress the balance between tenants and landlords.
Charging a tenant any fee which is not directly related to the “grant, continuance, assignment, termination or renewal” of an Assured Shorthold Tenancy or licence agreement is prohibited under the Act. This includes payments to third parties for services.
Example of banned fees include:
The following items are the only things which tenants are still liable for under the Act:
Rent as agreed between landlord and tenant.
Utilities and council tax if they are not included in the tenancy agreement.
A refundable deposit capped at five weeks’ rent for properties where the total annual rent is under £50,000 and capped at six weeks’ rent for properties where the annual rent is more than £50,000.
'Reasonable costs' (capped at £50) resulting from changes to the tenancy agreement as requested by the tenant.
Early termination of the tenancy as requested by the tenant.
'Reasonable costs' incurred from defaults by the tenant such as late payment or rent or lost keys.
Any landlord or letting agent found to be charging banned fees could be fined £5,000 for a first offence and face an unlimited fine if they break the rules again within five years.
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