The introduction of the Tenant Fees Act 2019 marked a significant change in the UK rental market. This legislation, designed to protect tenants from unfair charges, has had a substantial impact on how landlords and letting agents operate. In this blog, we’ll explore the key aspects of the Tenant Fee Ban and what landlords need to know to stay compliant.
What is the Tenant Fees Act 2019?
The Tenant Fees Act 2019 was introduced to reduce the financial burden on tenants by banning most upfront fees charged by landlords and letting agents. The Act applies to all assured shorthold tenancies, student accommodation, and licenses to occupy housing in England.
Key Provisions of the Act
- Banned Fees The Act prohibits landlords and letting agents from charging tenants any fees other than those explicitly permitted. Banned fees include charges for references, credit checks, inventory checks, and professional cleaning. Essentially, anything that is not a “permitted payment” is now illegal.
- Permitted Payments The Act allows landlords to charge tenants certain payments, including:
- Rent
- A refundable tenancy deposit (capped at five weeks’ rent)
- A refundable holding deposit (capped at one week’s rent)
- Payments for utilities, TV license, and council tax if included in the tenancy
- A fee for late payment of rent (if it exceeds 14 days)
- Replacement of lost keys or security devices
- Holding Deposits Holding deposits are capped at one week’s rent and must be returned within 15 days unless the tenant withdraws, fails a Right to Rent check, or provides false or misleading information. The deposit must be refunded or put towards the rent or tenancy deposit.
- Enforcement and Penalties Enforcement of the Tenant Fees Act is carried out by Trading Standards. Landlords or letting agents found to be in breach can face fines of up to £5,000 for a first offence. Repeat offenders may face fines of up to £30,000, banning orders, or even criminal prosecution.
Impact on Landlords
The Tenant Fees Act has shifted the cost burden from tenants to landlords. As a result, landlords may experience an increase in operational costs, particularly if they were previously charging fees for services like referencing or inventory checks.
To adapt, landlords need to consider:
- Absorbing Costs: Landlords may need to absorb the costs of services that can no longer be charged to tenants. This could impact profitability, especially for smaller landlords.
- Increasing Rent: Some landlords may consider increasing rent to offset the loss of income from banned fees. However, this must be balanced with the need to remain competitive in the rental market.
- Professional Property Management: Using a property management service like HouseManage can help landlords navigate these changes. Professional managers can streamline processes, reduce costs, and ensure compliance with the Tenant Fees Act.
Staying Compliant
Compliance with the Tenant Fees Act is crucial to avoid hefty fines and potential legal action. Here’s how landlords can ensure they’re following the rules:
- Review Your Fees: Make sure you’re not charging tenants any banned fees. If you use a letting agent, confirm they’re compliant with the new regulations.
- Update Tenancy Agreements: Ensure all tenancy agreements reflect the changes brought about by the Tenant Fees Act, particularly regarding permitted payments and deposit caps.
- Stay Informed: Legislation can change, so it’s important to stay up-to-date with any new regulations or amendments to existing laws. Joining landlord associations or subscribing to industry newsletters can help you stay informed.
Conclusion
The Tenant Fees Act 2019 has had a significant impact on the UK rental market, shifting the financial burden from tenants to landlords. While this presents challenges, it also offers an opportunity for landlords to refine their operations and improve tenant relationships. By staying compliant and considering professional management services by HouseManage, landlords can navigate these changes effectively and continue to thrive in the rental market.
