The new Tenants Fees Act 2019 came into force on 01 June 2019 and has changed the landscape for residential letting; there is now a ban on letting fees and caps on the amount that renters can be charged for their deposit have been introduced.
We detail below the main elements of the changes, but would suggest that Landlords take specific advice on their individual circumstances if they have any concerns.
Who does this affect?
This affects every Assured Shorthold Tenancy, also known as an AST, entered into after 01 June 2019 as well as any Licence to Occupy entered into after this date.
The restrictions will apply to all Tenancies new and old from 01 June 2020.
What are the main changes?
When charging a Tenant for minor damages or breakages the onus will be on the Landlord to provide evidence that the claim was reasonable, as well as providing evidence of the costs before they are levied; the aim is to stop the more unscrupulous landlords overcharging, such as £50 for a replacement glass or lightbulb.
Deposits will also be limited to an equivalent of five weeks’ worth of rent as a maximum.
Holding deposits are now limited to the equivalent of one week of rent.
Charges for Tenancy changes are limited to £50, unless the Landlord can prove that the process cost more than this.
There will also be a restriction on Landlords using the Section 21 (no fault) eviction procedure until they have paid back any unlawfully deducted fees or unlawful holding deposit.
What can a Landlord charge for?
- Tenancy Deposit (subject to a maximum of five weeks rent equivalency)
- Holding Deposits (subject to a maximum of one weeks rent equivalency)
- Default payments; if detailed in the Tenancy Agreement
- Payments to cover unpaid utilities; if detailed in the Tenancy Agreement
What happens if the Act is breached?
The Local Authority Trading Standards Office will be in charge of enforcement and if any prohibited payment is found to have been charged then a Landlord may be prosecuted.
For a first offence a Landlord can expect to receive a fine of up to £5,000, for any further offences this could rise to £30,000 a full criminal prosecution or even a ban on letting properties (limited to one year).
A Landlord will also have to repay the original deducted sum to the Tenant.
What do I need to do?
Review your Tenancy Agreements and Licences to Occupy to ensure that not only have no prohibited payments been charged already, but there is no facility to do so in the future.
If a prohibited payment has been made then ensure that the money is repaid to the Tenant at the earliest opportunity; the Tenant Fees Act 2019 is a new Act and whilst there is technically no leeway, you are likely to receive a more positive response if you have solved problems yourself and at an early stage.
If you have any specific concerns or require additional information on the changes and how they will affect you, then please do not hesitate to contact our Landlord & Tenant team.