Following the introduction of The Tenant Fees Act 2019 (TFA 2019) in June this year, this has vastly changed the fees that a landlord is permitted to charge its tenants. The TFA 2019 applies to assured shorthold tenancies, student accommodation tenancies and licences to occupy housing in the private rented sector.
All landlords will need to ensure their current practices regarding payments of holding deposits, rent deposits, inventory fees and penalties for late payments comply with the act. The provisions will apply immediately to tenancies created on or after 1 June 2019, and to all tenancies whenever granted from 1 June 2020.
Landlords should have updated their standard form tenancy agreements to ensure that any new tenancies comply with the TFA 2019. The act was introduced to provide more protection for residential tenants in the private rental sector in England and to stop rogue landlords from taking advantage.
The government has also introduced a detailed guidance on the TFA 2019 which can be found on their website.
The TFA 2019 restricts the payments letting agents and landlords can request from tenants. The fee restrictions have been put in place to help reduce and standardise the costs faced by tenants. This also includes a cap on the amount that landlords can charge as a deposit and the banning of letting fees altogether.
What can landlords charge under the TFA 2019?
Landlords can only require tenants to make a payment if it is classed as a ‘’permitted payment’’ under Schedule 1 of the TFA 2019. Listed below are examples of the permitted fees that landlords and agents are allowed to request and receive.
Rent
Landlords should be aware that the rent should be agreed at the start of the tenancy and should be payable on regular agreed intervals.
Tenancy Deposit
This is money held as security for the performance of the tenant’s obligations under the tenancy. The maximum deposit that a landlord will be able to request is:
- If the annual rent is less than £50,000 per annum, the deposit is capped at five weeks
- If the annual rent is more than £50,000 per annum, the deposit is capped at six weeks
Holding Deposit
This is usually payable to secure the tenancy whilst referencing checks are being undertaken. A landlord is only entitled to hold one deposit in respect of each property.
Replacement of a lost key/security device
The landlord can ask the tenant to pay a fee to cover the cost of replacing the lost key or security device giving access to the property. The cost must be reasonably incurred by the landlord as a result of the default and a landlord must be able to provide an invoice to show the costs they have incurred.
Default fees
When the rent payment has been outstanding for 14 days or more, a landlord can charge a default fee. Default fees for late payment of rent are capped at 3% above the Bank of England’s base rate for each day the payment has been outstanding.
Non compliance
If landlords or letting agents breach the legislation by requiring a tenant to make a prohibited payment they could face a fine of up to £5,000, or up to £30,000 if they have committed a similar offence in the previous 5 years.
If you require further advice or have any questions, please do not hesitate to contact us at info@carterbond.co.uk
