The Tenant Fees Act 2019 (“Act”) came into force in England for all new or renewed tenancy agreements signed on or after 1 June 2019 and will apply to all tenancies from 1 June 2020.
The Act seeks to control payments that are “in connection with a tenancy of housing in England”. In essence, most payments are prohibited unless they are permitted by the Act. For the purpose of the Act, a tenancy is defined as one of the following:
- assured shorthold tenancy
- licence (lodger lettings for example)
- student letting (provided by a specified educational institution)
The government asserts that the aim of the Act is to reduce the costs that tenants face at the outset, and throughout, a tenancy, whilst removing hidden costs. Local enforcement authorities have primary responsibility for enforcing this legislation.
Schedule 1 of the Act sets out permitted payments that a landlord (or letting agent) may receive in connection with a tenancy. In effect, under the Act, the permitted payments are:
- Tenancy deposit (capped at no more than 5 weeks’ rent where the total annual rent is less than £50,000, or 6 weeks’ rent where the total annual rent is £50,000 or above)
- Holding deposit (capped at no more than 1 week’s rent)
- Payment in the event of a default
- Payment of Damages for Breach of an Agreement
- Payment on variation, assignment or novation of a tenancy
- Payment on termination of a tenancy
- Payment in respect of council tax
- Payment in respect of utilities etc
- Payment in respect of a television licence
- Payment in respect of communication services
Examples of prohibited payments (i.e. non-permitted payments) that are no longer permitted but have commonly been charged include; referencing, administration and credit checks.
Landlords (and/or letting agents) should take particular care with tenancy and holding deposits as these are particularly regulated.
Effects of Breaching the Act
The penalty for a first offence is up to £5,000. If a second offence is committed within 5 years, a penalty of up to £30,000 is payable. In addition, a second offence is a criminal offence and further, a banning order offence.
Any financial penalty imposed is enforceable as if it were an order of the county court.
If a corporate entity commits an offence, an officer may be liable and proceeded against personally.
Prior to receiving a financial penalty, a “Penalty Notice” must be served on the landlord (or letting agent) giving them the opportunity to make written representations within a certain time frame. This notice is effectively a notice of intent and is required to abide by strict criteria.
Termination of the Tenancy
The Act also has implications when it comes to evicting tenant(s) from a property. Should a landlord require the tenant to make a prohibited payment which subsequently becomes paid, the landlord will be unable to issue a section 21 notice until the prohibited payment has been repaid.
However, it is important to note that a landlord may still serve a section 21 notice even if the letting agent has requested and received a prohibited payment.
If you require more information on the Act or any other aspect in relation to residential Landlord and Tenant matters, please contact the writer, Samuel Lane, at firstname.lastname@example.org.
“Landlords and lettings agents must take greater care when requesting payments from tenants in light of this Act, but should not be deterred from making a legitimate request. The question that must be asked is – is the request within the list of permitted payments? If you are uncertain, seek professional advice. Whilst evidently it could be costly to request a prohibited payment, simply deciding not to make the request could result in the landlord missing out on payments that could have accumulated.”