THE TENANT FEES ACT 2019
May 22, 2019
The Tenant Fees Act 2019 commences on 1 June 2019 and controls what payments a landlord or letting agent can charge a tenant when setting up a new tenancy. Essentially all fees are prohibited unless expressly “permitted” under the act.
At PJH we have consistently charged low fees and so we’ve decided not to wait until June 1st and offer Fee-Free tenancies with immediate effect.
WHAT IS CHANGING?
When the Tenant Fees Act 2019 comes into force on 1 June 2019 it will be illegal for letting agents to charge fees to tenants apart from a small number of exemptions that are referred to as ‘permitted payments’.
Permitted payments are:
- Utilities and council tax
- Security deposits
- Holding deposits
- Default fees eg replacement key or charge for a late rent payment
- Fees for changing a tenant or ending a tenancy early
FEES YOUR LETTING AGENT CAN NOT ASK YOU TO PAY
On tenancies signed on or after 1 June 2019 your agent can no longer charge for:
- Administration fees
- Application fees
- Set up fees
- Referencing fees
- Credit checks
- Guarantor fees
- Permitted occupier fees
- Right to Rent fees
- Contract negotiation fees
- Inventory charges
- Saturday move-in fees
- Check-in fees
- Check-out fees
- Renewal fees
- End of tenancy fees
Below are examples of ‘Permitted Payments’ under the Act.
Please Note: Parnell Jordy & Harvey do not intend to charge for any ‘Permitted Payments’, ensuring we remain truly Fee-Free for our tenants.
HOLDING DEPOSIT (PER TENANCY) — ONE WEEK’S RENT.
The Tenant Fees Act 2019 permits a Holding Deposit of one weeks rent to be charged to reserve a property.
SECURITY DEPOSIT (PER TENANCY)
For rent under £50,000 per year – Five weeks’ rent. For rent over £50,000 per year – Six weeks’ rent. This covers damages or defaults on the part of the tenant during the tenancy.
Interest at 3% above the Bank of England Base Rate from Rent Due Date until paid in order to pursue nonpayment of rent. Please Note: This will not be levied until the rent is more than 14 days in arrears.
LOST KEY(S) OR OTHER SECURITY DEVICE(S)
Tenants are liable to the actual cost of replacing any lost key(s) or other security device(s). If the loss results in locks needing to be changed, the actual costs of a locksmith, new lock and replacement keys for the tenant, landlord any other persons requiring keys will be charged to the tenant. If extra costs are incurred there will be a charge of £15 per hour (inc. VAT) for the time taken replacing lost key(s) or other security device(s).
VARIATION OF CONTRACT (TENANT’S REQUEST)
£50 (inc. VAT) per agreed variation. To cover the costs associated with taking landlord’s instructions as well as the preparation and execution of new legal documents.
CHANGE OF SHARER (TENANT’S REQUEST)
£50 (inc. VAT) per replacement tenant or any reasonable costs incurred if higher. To cover the costs associated with taking landlord’s instructions, new tenant referencing and Right-to-Rent checks, deposit registration as well as the preparation and execution of new legal documents.
EARLY TERMINATION (TENANT’S REQUEST)
Should the tenant wish to leave their contract early, they shall be liable to the landlord’s costs in re-letting the property as well as all rent due under the tenancy until the start date of the replacement tenancy. These costs will be no more than the maximum amount of rent outstanding on the tenancy.
While agents cannot charge fees to tenants (other than permitted payments) on tenancies starting after 1 June 2019, agents are allowed to charge fees on pre-existing tenancies until 31 May 2020.
WHAT IS AND ISN’T A NEW TENANCY?
The fee ban applies to Assured Shorthold Tenancies (ASTs). If your tenancy renews and a new contract is signed after 1 June 2019, then the letting agent can’t charge any further fees and has to repay your check-out fee if this was taken at the start of the tenancy. However, if the tenancy continues after the end of the fixed term (what is known as a “periodic tenancy”) then your letting agent can continue charging fees until 31 May 2020 when they fall due under the terms of your tenancy agreement.
FREQUENTLY ASKED QUESTIONS
DO I STILL HAVE TO PAY FOR MY REFERENCE?
No, reference fees cover the costs of checks made by a letting agent to gauge whether a prospective tenant will be able to afford the rent throughout the tenancy. On new tenancies from 1 June 2019, the costs of these checks will be met by the landlord.
DOES THIS AFFECT MY SECURITY DEPOSIT?
Yes it does. For new tenancies signed on or after 1 June 2019, security deposits are capped at the equivalent of five weeks’ rent (or six weeks if the annual rent is over £50,000). If you have paid a higher deposit for your existing tenancy, when you sign a new contract, the letting agent will have to refund, within 28 calendar days, anything which is more than five or six weeks of the new rent.
WHAT IF I WANT TO END MY TENANCY EARLY?
Where a tenant wants to leave their tenancy early, the agent is entitled to charge fees. If the tenancy agreement allows for one tenant to leave and another to take their place (a change of sharer) the agent can charge up to £50 (inc VAT) or their reasonable costs if higher. The agent will have to prove their costs are more than £50 if they charge more. If the tenant wants to leave altogether, the agent can charge their costs in re-letting the property up to the maximum rent still due under the tenancy.