On 1st June 2019 the Tenants Fees Act 2019 (“the Act”) comes into force.
The purpose of the Act is to restrict landlords and their letting agents from charging tenants fees and interest in various circumstances.
This article is a broad summary of what can and cannot be charged going forward.
Tenancies to which the Act applies:-
Assured Shorthold Tenancies.
Most student lettings.
Licences to Occupy Residential Accommodation.
Rent. If rent is greater for one period than rent payable for a later period in the first year the extra rent is not permitted. For example, if the rent for the first year is £30,000.00 and the rent is paid monthly then for instance the landlord cannot charge, say, rent of £10,000.00 in the first month with the balance payable thereafter by monthly payments.
In respect of the tenancy deposit if the rent is less than £50,000.00 then the maximum tenancy deposit is 5 weeks rent. If the rent is more than £50,000.00 then the maximum deposit is 6 weeks rent.
Holding Deposit. The maximum holding deposit now is not more than a sum equal to 1 week’s rent.
Default fees. These are only permitted for:-
Loss of key or other access device.
Failure to pay rent in full within 14 days of the due date.
In addition, the requirement for paying default fees must be expressly stated in the tenancy agreement.
Default fees can attract interest but this is limited to a maximum sum of 3% per annum above base rate.
Any prohibited payment or arrangement would not be enforceable against a tenant or guarantor.
The enforcement authority (and in this regard it is assumed it will be the Local Authority although the legislation specifies it will be either Secretary of State or Local Weights and Measures Authority) can enforce repayment.
The tenant can apply to the First Tier Tribunal to recover any prohibited payment.
The landlord or letting agent can face a fine of up to £30,000.00.
What we have stated is simply a brief summary of the changes that will affect landlords and, in particular, letting agents.
For a more detailed summary of the restrictions and requirements imposed by the Act, please contact Steven Porter on telephone number 020 7644 6091 or email email@example.com who will be happy to assist you with any queries you may have.