Tenant Fees Act Update pre-June 2019

With the impending introduction of the Tenant Fees Act, we asked the NLA Telephone Advice Line experts what common queries they'd been asked, what landlords were worried about, and what they thought landlords needed to know ahead of the introduction of the act on 1 June 2019. See below for a handy list of FAQs. For further reading on the subject, see the NLA Guide: Tenant Fees Act (England).

Will the tenant fees ban apply to tenancies signed before 1 June?

Not immediately. There will be a 12-month transition period on fees to allow landlords and agents to make appropriate arrangements for existing tenancies.

What can I charge for after the tenant fee ban comes in to effect?

Only certain payments are permitted once the Tenant Fees Act comes into force. There are also restrictions on many of these:

  • Holding deposit (capped at one week’s rent and subject to conditions)
  • Rent
  • Security deposits (up to five weeks’ rent if the annual rent is less than £50,000, and six weeks’ otherwise)
  • Payments to change the tenancy at the tenant’s request
  • Payments for early termination of the tenancy at the tenant’s request
  • Payments for utilities, broadband, TV, phone and council tax (must be no more than the cost of the service)
  • ‘Default fees’ for replacement of a lost key or security device, and interest charges when rent payments are at least 14 days late (these must be stated in the tenancy agreement).

What can I no longer charge for after the Tenant Fees Act is enforced?

Any other charges are not permitted. This includes, but is not limited to:

  • Referencing
  • Credit checks 
  • Inventories 
  • Assessing guarantors
  • Services, such as cleaning or gardening
  • Administration.

If the tenancy was signed before 1 June 2019, can we still charge more than five weeks deposit?

Yes, you can.

There will be no need to refund the part of the deposit that is above the cap unless the tenancy is renewed with a new fixed term after the Act comes into force.

Can I charge if the tenant requests a change in tenancy or an early surrender?

While most costs related to assignment or surrender of a tenancy are prohibited, landlords and agents are still allowed to charge certain small sums if the tenant requests a change in tenancy or an early surrender.

A change to a tenancy could include:

• Permission for pets to be kept in the property

• A change of sharer in a joint tenancy

• Permission to sub-let

• Permission for a business to be run from the property.

Where the tenant has requested a change in the tenancy, the landlord may usually charge a fee of up to £50 (including VAT) for the change. A higher charge may be permitted but the landlord will need evidence that this is reasonable.

What if I find a replacement tenant where a previous tenant surrendered the tenancy? Can I charge a fee to the previous tenant?

Landlords cannot double charge for rent, so if a replacement tenant is found, the landlord cannot continue to charge the existing tenant once the new tenant has moved in. It’s also important to note that the remaining rent cannot be charged as a lump sum but must be taken as the tenant would have paid if they had remained in the property, e.g. each month. Landlords and agents cannot benefit financially from a tenant leaving early. Any payments that exceed the loss incurred will be classified as a prohibited payment.

 

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9 May 2019 - 3:52pm

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