The key changes resulting from the Tenant Fees Ban
Holding Fee Max one weeks rent – Very Strict compliance rules about return and deductions. see new Holding Deposit Form.
Ensure Your Tenancy Application Form Tenant Fee Ban and GDPR compliant
Deposits now capped 5 weeks where rent below £50K annum 6 weeks if above
Admin Fees Abolished
Defined items ‘Permitted Payments” a Landlord can charge a Tenant
Maximum charges for late rent payments, replacing Keys and Locks and Maximum charges for changing a Tenancy
If you fail to comply you are prohibited from serving a Section 21 Notice to end the Tenancy, recompense the Tenant and be exposed to fines of up to £30,000 or criminal conviction
There are maximum permissible deposits being The Tenant must pay a “Deposit” of no more than 5 weeks rent where the rent is below £50,000 per annum or a “Deposit” of no more than 6 weeks where the rent per annum exceeds £50,000
Note where the rent is payable monthly multiply the rent by 12 then divided by 52. Then multiply the weekly figure by FIVE – please ensure you round down calculations. So do not exceed the optimum deposit of FIVE weeks by even a penny. ONLY 6 weeks where the rent exceeds £50,000 per annum
Admin Fees Banned Previously one could charge a Tenant fees, but those days are gone. The days of charging for admin, letting fees, vetting, references, inventory, check in, check out, cleaning, pet insurance or ANY other fee that is not explicitly permitted within the legislation will be unlawful and harsh penalties exist. – 1 June 2019 Ban on Tenant Fees. The rules are severe – Cap on Deposits and Charges!
What a Tenant can be charge must comply with Permitted Charges Legislation
BILLS ARE DEFINED as Utilities, Television Licence and Communication Services Unless otherwise agreed in writing by the Landlord, the Tenant must arrange to be billed for utilities charges for the property [electricity, gas or other fuel, or water or sewerage] and pay the television licence fee for the property. The Tenant must arrange to be billed for communication services meaning a service enabling any of the following to be used— (a) a telephone other than a mobile telephone; (b) the internet; (c) cable television; (d) satellite television. Where the Landlord provides such utilities or services the Landlord shall only charge reasonable costs incurred by the landlord for or in connection with the provision of the utility or service. The Tenant agrees to remain liable for these items after the Expiry of this Agreement until the tenancy has legally ended. Where the Tenant allows, either by default of payment or specific instruction, the utility or other services to be cut off, whether during or at the end of the tenancy, the Tenant shall be liable for a Landlords loss and the costs associated with reconnecting or resuming such..
Rent Increase- The Landlord may increase the Rent after the Expiry of the fixed term of the Tenancy Agreement by giving the Tenant at least one months’ notice in writing prior to a Rent Payment Day specifying the amount of the new rent. The Landlord will not increase the Rent during the fixed term of the tenancy.
Clauses charging for non permitted fees expose you to a fine
Previously we were permitted to charge for Rent Arrears Letters, Possession Notices and penalties for Tenant non-performance this is no longer the case. The rules for what may be charged are now explicit there is no ambiguity. These are called permitted charges. Clauses such as check out costs and MUST pay X for carpets etc to be cleaned are now unlawful
The following clauses for fees are the ONLY ones allowed
Cap on late rent interest now applies The Rent must be paid in advance on the Rent Payment Day specified in this Tenancy Agreement. If the Rent is late by more than 14 days, the Landlord can charge interest at 3% above the Bank of England base rate and interest will be charged until the date full payment is received.
Keys should a Tenant request a spare or lose a key or security device giving access to the property and requires a replacement a fee can be charged for such. The Landlord or Agent shall provide evidence in writing to the person liable for the payment to demonstrate that such costs are reasonable and not exceeding £50
Charges for variation, assignment or novation of a tenancy, should the Tenant request of the Landlord or Agent a variation, assignment or novation of a tenancy [the substitution of a new contract in place of an old one], the Landlord/Agent reserves the right to charge a fee that is not likely to exceed £50 but may do so. The Tenant shall be notified in writing a summary of the reasonable costs incurred.
IMPORTANT TENANT LIABILITY WHILST PERMITTED CHARGES ARE DEFINED IT DOES NOT REMOVE THE LANDLORDS RIGHT TO SEEK RECOMPENSE FOR THE TENANTS FAILURE TO COMPLY. INCLUSION OF A GENERIC LOSS CLAUSE WITH CAVEAT “failure to perform or comply with prevailing legislation.”
LANDLORDS RIGHT TO RECOVER LOSSES The Tenant shall remain liable for any reasonable costs or losses suffered by the Landlord resulting from conduct of or damage caused by the Tenant (or any person they have invited into the Property or who is permitted to live there). The Landlord reserves the right to seek recompense for lawful costs. Such as damage, legal fees, court fees or any other losses resulting from the tenant, occupiers or their guest’s failure to perform or comply with prevailing legislation.
The Ban on Letting Fees Bill is very strict and very easy to be tripped up. Not only can a Landlord or Agent be fined, the tenant can block eviction. The new Legislation is that severe
Please read the government guidance to Ban on Letting Fees – Which appears flawed but should provide a defence in that you had a reasonable expectation the government guidance be valid. See Government Guidance Ban on Letting fees Bill
Fine of up to £5,000 for a first offence. If you repeat a breach within 5 years of the fine, you may face criminal prosecution or be fined £5000 up to £30,000. Such action may result in being banned to Let or Manage Properties as may be considered not a fit and proper person under 2004 Housing Act and subject to a banning order under section 14 of the Housing Act 2016.