In June 2019, the Tenant Fees ban came into effect, which changed the amount that estate agents and landlords can charge tenants. There is still a bit of confusion by some landlords regarding what they can charge to be in compliance. We want to help with that.
In a nutshell, the act prohibited most tenant admin fees and capped tenancy deposits at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above.
Here we answer some of the most common questions, but for your own due diligence and more detail, read the government’s Tenant Fees Act: Guidance for Landlords.
What fees can a landlord ask a tenant to pay?
You cannot require a tenant (or anyone acting on their behalf or guaranteeing their rent) to make certain payments in connection with a tenancy.
The only payments you can charge in connection with a tenancy are:
a) The rent
b) A refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above
c) A refundable holding deposit (to reserve a property) capped at no more than one week’s rent
d) Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
e) Payments associated with early termination of the tenancy, when requested by the tenant
f) Payments in respect of utilities, communication services, TV licence and council tax; and
g) A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement. If the fee you are charging is not on this list, it is a prohibited payment and you should not charge it.
What is an acceptable default fee?
You can only charge a default fee where a tenancy agreement permits you to do so and one of the following applies:
1. A tenant is late paying their rent
• A default fee can be charged for late payment of rent but only where the rent payment has been outstanding for 14 days or more (from the date set out in the tenancy agreement)
• Any fee charged must be no more than 3% above the Bank of England’s base rate for each day that the payment has been outstanding. A fee which exceeds this amount is a prohibited payment.
2. A tenant has lost a key or security device giving access to the housing and requires a replacement
• A default fee can be charged for a lost key or equivalent security device. The landlord or agent must provide evidence in writing to the person liable for the payment to demonstrate that the costs they have incurred are reasonable. A fee which exceeds the reasonable costs incurred by the landlord or agent is a prohibited payment.
What about existing tenancies? How does the ban affect them?
If a tenancy agreement was entered before 1 June 2019, you can continue to require a tenant to pay fees written into that agreement (e.g. check-out or renewal fees) until 31 May 2020.
After 1 June 2020, the term requiring that payment will no longer be binding. Should you, in error, ask a tenant to make such a payment, you should return the payment immediately and must return this within 28 days. If you do not return the payment within 28 days, you will be treated for the purposes of the Act as having required the tenant to make a prohibited payment (a payment that is outlawed under the ban).
You do not need to return any amount of tenancy deposit that is over the cap for tenancy agreements that were entered into before the Tenant Fees Act came into force.
Can a landlord require a tenant pay for a professional cleaning at the end of a tenancy?
The short answer is no. The longer answer is a landlord cannot require a tenant to pay for a professional clean when they check-out. However, if the tenancy was entered into before 1 June 2019 and the tenant agreed in their contract to pay fees for cleaning to be provided then a landlord can continue to charge these fees up until 31 May 2020.
But a landlord may request that the property is cleaned to a professional standard. So the tenant is responsible for ensuring that the property is returned in the condition they found it, aside from any fair wear and tear. However the tenant cannot be required to use a particular company to clean the property. If the property is not left in a fit condition, landlords can recover costs associated with returning the property to its original condition and/or carrying out necessary repairs by claiming against the tenancy deposit.
Can a landlord require that a tenant pay for referencing?
Once again, no. A landlord cannot require that a tenant pay for the services of a third party services; these include referencing, inventory, check-out and cleaning.
However, a tenant may submit references from a third party referencing firm that they pay for. But the landlord may not require that third party referencing companies be paid for by the tenant. The landlord may pay for these services, however.
A landlord can ask a tenant to provide any information the landlord reasonably requires to undertake referencing or credit checks through a third party. If the tenant does not provide this when requested and they have been given reasonable notice, the tenant may be unable to let the property and the landlord will be entitled to retain the holding deposit if the tenant has paid one.
There you are… some of the most frequent questions we get asked about the tenant fees ban. If you require more information about the responsibilities of being a landlord, check out the government’s How to Let guide.
