Landlord tenant law book

A ban on the fees landlords can charge tenants in England has been extended to cover all existing tenancies.  Only a limited range of fees can now be levied and landlords who breach the regulations will face hefty fines.

The Tenant Fees Act 2019, introduced last year, banned most fees which could be charged on tenancies signed after 1 June 2019.  Now a 12 month transition period has ended, meaning tenancies agreed before June last year are also included. Any pre-existing tenancy clauses that charge prohibited fees are now unenforceable.

The high levels of fees previously charged to tenants had become controversial and the ban was introduced by the government to reduce costs for private renters.  Banned charges include fees for viewing properties, check-out fees, charges for taking references, general administration costs and others.

The Act also restricts the amount landlords can charge as a security deposit, which is now limited to between five and six weeks rent, depending on the annual rental.

Landlords and managing agents who continue to make banned charges could face a fine of up to £5,000.  Repeat offences could result in a criminal record and an unlimited fine.

Fees which are still permitted include charges to change a tenancy agreement, certain costs incurred in an early termination of a tenancy and interest payments for late payment of rent.  Some permitted fees are capped under the legislation.

David Smith, partner at law firm JMW Solicitors told Property Industry Eye “Good practice could be for landlords and agents to contact their tenants and inform them what specific terms in respect of prohibited payments are no longer valid.”

James Burgoyne, Director – Claims & Technical, Brunel Professions said property agents must make sure they understand which fees can be charged and those which are capped or banned.  “Agents should inform all their landlords about the new restrictions and put in place procedures to avoid any unintentional breaches of the new rules, such as not updating arrangements or giving required refunds when new Fixed Term agreements are signed,” he said.

Reports about new legislation have been published by Arla Propertymark, Rightmove and the Residential Landlords Association.

Brunel provides a wide range of Professional Indemnity Insurance broking services to property professionals.  Click here to find out more, or call Mark Sommariva on 0203 475 3275.