The Tenant Fees Act came into force in England on 1 June. This is a very important change in the law for everyone living and working in the private rented sector.
The key change is that landlords and letting agents can’t charge tenants a fee for anything that isn’t listed in the Act as a permitted payment. Allowable payments are:
- Rent
- Tenancy deposit
- Holding deposit
- Payment in the event of a default
- Payment on variation, assignment or novation of a tenancy
- Payment on termination of a tenancy
Also, landlords and letting agents can still take payments for council tax, utilities, TV licences and for communication services such as telephone and internet. Fees can’t be charged on anything that isn’t on the list above, including:
- Credit checks
- Inventories
- Cleaning services/professional cleaning
- Referencing
- Admin charges
- Gardening services
Landlords and agents do need to read the small print – or in this case, the Act – because there are some other changes you will need to know about. Go to https://www.gov.uk/government/collections/tenant-fees-act to see the Act in full.
There are now a number of limitations on the way rent is paid. Holding and tenancy deposits are capped at one week’s rent and five or six weeks’ rent accordingly and it is not acceptable to ask for an additional deposit to be paid by renters with pets. It is permissible though to charge a higher rent if a tenant moves in with their cat, dog or rabbit.
Fees are still allowed for replacing lost keys or electronic fobs but charges must now be evidenced in writing to demonstrate that they are reasonable. Landlords and agents are also still able to charge interest on overdue rent but the caveat here is that the fee only kicks in when the rent is more than 14 days late. Interest can only be charged at 3% above the Bank of England’s annual percentage rate for each day the rent is outstanding.
Tenants can no longer be charged a penalty for contractor call outs or missed appointments but deductions can be made from the tenancy deposit if there is a clause in the tenancy agreement that has been broken, such as not returning the property to the state it was in at the beginning of the tenancy. Charges can also be made for work or repairs that are deemed necessary before the end of the tenancy if the damage is the fault of the tenant and the landlord or agent needs to provide accurate evidence of any costs incurred.
To be absolutely certain that landlords understand the new rules, ARLA has developed a toolkit that explains the new legislation in detail. Go to https://www.arla.co.uk/tenant-fees/ to download a copy.
Later in the week, we will take a look at the industry response to the new Act and asking what will be the likely impact on landlords and agents.