The new Tenant Fees Act 2019 was bought into effect on 1 June 2019 to prevent landlords and agents from charging private tenants excessive letting fees.
It has been reported that the Tenant Fees Act will save UK renters £192 million a year but could cost landlords up to £83 million and letting agents £157 million in its first year.
Landlords should familiarise themselves with the new rules to ensure that they are not breaking the law and at risk of receiving a fine or penalty.
Which fees are banned under the new rules?
The Tenant Fees Act bans all up-front admin fees and end of tenancy fees and caps initial deposits and holding deposits.
It is now illegal to charge tenants admin fees. This includes costs associated with reference checks, credit checks, inventory checks, check-out fees, and guarantor fees. Landlords are also not allowed to charge a fee for the property to be professionally cleaned at the end of a tenancy.
Deposits may not exceed the price of five week’s rent and holding deposits to reserve a property cannot cost more than one week’s rent.
Landlords are still permitted to charge fees for late rent payments and for leaving a tenancy early.
Fees detailed in tenancy agreements that were signed before 31 May 2019 are still applicable until 31 May 2020.
Consequences for landlords
Landlords should ensure that they have reviewed their tenancy agreements for all new tenants and renewals issued after 1 June 2019.
Any landlords or letting agents found to be breaching the act could receive a fine of £5,000 and civil penalties of up to £30,000.
More details about the Tenant Fees Act can be found on the government website here.