Are you aware of all impacts of the tenant fee ban?

Are you aware of all impacts of the tenant fee ban?

The Tenant Fees Act, effective as of 1st June 2019, is the government’s new regulations banning many of the lettings fees charged to tenants and capping the maximum value of a tenancy deposit in England, following similar regulations in Scotland.

The goal of the Act is that tenants will know exactly how much renting costs without the possibility of any hidden or extra fees being unfairly imposed. This, in theory, means that the fees charged represent the real value of the service provided rather than being an arbitrary amount. In this way, it is hoped that the cost of moving home is reduced, increasing mobility in the rental sector.

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.

  • Examples of what is banned include:
  • Referencing
  • Inventories
  • Credit checks
  • Administration charges
  • Professional cleaning
  • Gardening services

The following items are the only things which tenants can be held liable for under the new rules:

  • 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.

However, it turns out that many landlords are still unaware of the full impacts of this new legislation – specifically, that the ban applies backwards as well as forwards on all Assured Shorthold Tenancy agreements.

According to the agent Chestertons, as reported in Property Wire, many landlords mistakenly believe that extra costs in clauses of contracts drawn up before 1st June 2019 may not be binding when a tenant moves out of a property.

Donna Ingram-Fletcher, head of tenancy services at Chestertons, said: ‘Many landlords are unaware that if a tenant moves out after 31 May 2020 costs cannot be charged to the tenant, even if these were written into a tenancy agreement. Landlords could be in for a shock next June when services, such as an end of tenancy professional clean, cannot be charged to the tenant despite a clause in the contract. So, the wording of tenancy agreements is more important than ever to ensure peace of mind and prevent landlords from being caught out.’

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