Close up of someone signing a document - tenant fees act

Almost six months since the Tenant Fees Act took effect in England, confusion still reigns. According to calls coming in to our advice line experts, agents are still giving conflicting advice about the need to refund deposits of more than five weeks’ rent taken before the tenant fees ban came into effect. You don’t necessarily need to refund the deposits, but anecdotal evidence suggests some letting agents are contacting landlords and telling them they do.

Some agents are even charging fees for this service, but more worryingly, many do not fully understand the new legislation. We have received information about one agent who said that they had taken legal advice on the issue and advised landlords to refund their tenant.

While legislation is open to interpretation, it would require a test case to determine this. As things currently stand, though, the legislation appears to be clear. The Government’s own guidance explicitly states that deposits taken before 1 June 2019 and which are above the cap do not need to be refunded, unless there has been a renewal or a new tenancy agreement.

The agent in question is reportedly charging £25 + VAT for changing a tenancy agreement if this is needed. However, the agent says that landlords can organise this themselves and avoid the charge. 

The confusion has come about due to the transition period in the Tenant Fees Act. Tenancies from before 1 June this year fall into the one-year transition period during which fees that are included in the existing tenancy can still be charged. That transition period runs until the end of May 2020

The deposit cap is not included in that transition period, because it is considered to have been agreed at the beginning of the tenancy and is therefore a contractual requirement of that tenancy. For example, if a landlord took a six-week deposit before the cap came in, they wouldn’t need to refund the extra week.

The Government’s guidance on the transition period came out quite late, and it seems that advice was being shared to the effect that the deposit needed to be refunded before the guidance came out. This is not the case, and the Government’s guidance has backed this up.

It’s important to note that there are different requirements in Wales, and currently there is no deposit cap in place in Wales.

Landlords in England are no longer able to charge for many services provided to the tenant, including referencing, credit checks, inventories, assessing guarantors, and services such as cleaning, gardening and administration. However, landlords are still able to claim for damages where there is a breach of the tenancy agreement. 

Some FAQs on the ban in Wales are available here and on NLA Forms too.

For more information, visit gov.uk/government/publications/tenant-fees-act-2019-guidance. Or you can access the NLA’s guidance here.

12 December 2019 - 11:56am

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