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The End of Letting Fees

Posted in: Landlords, Property Owners

On 1st June, the Tenant Fees Act 2019 comes into effect in England, having received Royal Assent on February 12th this this year.

The Tenant Fees Act 2019 will bring a legal ban on agents and landlords charging fees in England. (This sort of charging has already been banned in Scotland and a ban is being debated in Wales). No fees will be allowable for the following – drawing up contracts, inventory checks, tenancy renewals, reference, right to rent or credit checks and any other administrative charges.

Landlords and agents will be able to charge for the following:

  • rent
  • a refundable holding deposit (no more than the equivalent of 1 week’s rent)
  • utilities
  • contractual charges at the tenant’s request up to a maximum of £50 (or more if this can prove reasonable costs have been incurred)
  • a refundable deposit (less than £50,000 a year and no more than 5 weeks)
  • a termination fee when the tenant requests to end the contract
  • default charges such as loss of keys at a reasonable level
  • a late rent charge (no higher than 3% above the Bank of England rate)

Even though the Act bans fees from 1st June for all new tenancies, existing tenancies are brought under the new Act from 1st June 2020.

Fees are allowable under any contracts already in existence until 30th May 2020 but tenants can challenge charges if they feel they are excessively high. Existing tenants should note however that a charge to renew their contract will not be allowed under the law even if this is before 1st June 2020.

If landlords or agents do charge unpermitted fees, the new legislation allows fines of £5000 for a first offence. For multiple breaches which could occur at the same time or at different times, fines will be set at £5000 for each offence. If landlord or agent is found to have charged banned fees again after being fined within 5 years, there is provision for an unlimited fine.

A further consequence of charging tenants unlawful fees is the inability to evict tenants under the Section 21 ground until the landlord or agent has repaid the unlawful charges.

Should agents or landlords be found to have breached the Act, tenants can get help from two possible sources. Trading Standards and their Local Authority can help tenants enforce the law and help them get their money back, if appropriate. The return of the fees should be repaid through First-Tier tribunal. The Local Authority may help with the application to the First-Tier tribunal.

Tenants can also bring any case of unpermitted charges by an agent through the Property Redress Scheme https://www.theprs.co.uk/ .