The Tenant Fees Act 2019 – changes ahead

13 January 2020

Residential landlords should be aware of the new legislation that has been introduced to stop tenants being required to pay their landlords additional fees.

Currently, the restrictions set out below apply to all new tenancies entered from 1 June 2019. However, from 1 June 2020 it will apply to all private assured shorthold tenancies even ones entered prior to 1 June 2019.

The Tenant Fees Act 2019 states that landlords can only require tenants to make payment of the following:

Rent (which can still be paid in the manner agreed between the parties)
Tenancy deposit (up to a maximum of 5 week’s rent unless the annual rent exceeds £50,000)
Holding deposit (up to a maximum of 1 week’s rent) which must be refunded unless the tenant pulls out of the tenancy
If the landlord pays bills such as utilities, council tax, TV Licence on behalf of the tenant they are entitled to reimbursement
A fee for the cost and inconvenience of late payment of rent or replacement of a lost key is permitted providing this is set out in the tenancy agreement
Damages for breach of agreement e.g. where damage is caused to the property
Costs in connection with a tenant’s request for a variation, assignment, or surrender of a tenancy. This is capped at a maximum of £50 unless the landlord can show further reasonable costs were incurred.
It is no longer possible to state that at the outset or on renewal of the tenancy agreement, that the tenant will have to pay a sum for the letting agent’s costs as has been common over recent years. No other fees are allowed to be recovered from the tenant.
As a result of the above, landlords need to check their deposits. If they are holding more than 5 weeks rent they should provide a partial return of the deposit on or before 30 May 2020.
If a landlord charges a fee (that does not fall within the permitted fees above) after the relevant date (ie after 1 June 2020) then he will not be able to evict his tenant until such time as the unlawful payment has been refunded.
In addition to the restriction on gaining possession, if a landlord is found to be in breach he could be fined up to £5,000 for a first breach. If a landlord is found to be in breach again within 5 years he can be subjected to an unlimited fine.
In addition to the above, if a landlord is found to have committed multiple breaches on the same occasion the fine is per breach. As such it is possible that very significant fines could be imposed even on a first time offender as it would be up to £5,000 per breach.
If a landlord is issued with a fine he can appeal the decision through the First Tier Property Tribunal but must act quickly, as he will only have 28 days from the final notice being served to make the appeal.