If you haven’t been planning ahead, now is the time for landlords, tenants and us agents to be gearing up for the tenant fees ban, which is coming into force on June 1.
Lord Bourne of Aberystwyth last week confirmed the legislation would begin this summer and everyone with an interest in the private rental sector is affected.
But what can we expect? CJ Hole’s guide to the tenant fees ban can help…
The tenant fees ban will affect…
…landlords, lettings agents and tenants. Although tenant fees are already banned in Scotland, this legislation will also ban them in England and Wales, although it’s expected the Welsh legislation will be marginally different to the proposals for England.
Are all tenancies affected by the tenant fees ban?
All new tenancies and renewals post June 1 will come under the new legislation. Once a year has passed, existing tenancies signed before June 1 2019 will also be affected.
Tenancy agreements signed before June 1 2019 will, in June 2020, see any clauses regarding fees made void.
What fees cannot be charged after June 1?
Among the fees banned under the new legislation are:
* ‘Admin’ fees
* Inventory fee
* Other ‘services fees’ (gardening, professional cleaning, de-flea)
* Guarantor form fee
* Credit check fee
* Cleaning services fee
* Referencing fee
Are there fees that can be charged despite the tenant fees ban?
As well as monthly rent, landlords and agents should still request a tenancy deposit, while holding deposits and fees for tenants defaulting on their agreements are also still allowed.
However, the tenant fees ban also clamps down on these remaining charges by capping them.
For tenancies of 12 months where £50,000 or less rent is to be paid, a maximum of five weeks’ rent can be requested as a deposit.
If more than £50,000 is being paid in rent over a year, six weeks’ rent can be demanded as a deposit.
Holding deposits will be subject to a 15-day deadline whereby if no decision is made or a landlord decides not to proceed with a tenant, the maximum one week’s rent deposit must be returned in full within seven days.
If a tenant decides not to proceed, the holding deposit does not need to be returned in full.
Should a tenant fall behind with rent or lose keys to their property, landlords and agents can charge a default fee.
As well as needing to prove their costs associated with non-payment of rent in writing, landlords can only charge interest at a maximum of 3% above the Bank of England’s base rate (so, currently 3.75%).
Finally, landlords and agents can charge a maximum of £50 to tenants who request changes to their tenancy agreement – unless landlords can prove in writing that the costs were greater than £50.
Can deposits still be deducted?
Yes, landlords are still able to make deductions for damage to property or unpaid rent, although deposits still need to be placed in a deposit protection scheme within 30 days.
Are there fines for charging banned fees?
Landlords and agents should be well aware that charging fees post June 1 could see them hit with a very heavy fine.
Not only that, tenants can claim back mis-charged fees with interest by going to county court.
In terms of fines, first offences could see a landlord or agent hit with a £5,000 punishment, while repeated offences are subjected to a fine of up to £30,000 from Trading Standards.
Landlords are also barred from using a section 21 notice to evict tenants if they have been charged banned fees and these have not been returned in full.
Content based on current draft of the Tenant Fees Bill (December 11, 2018). Should the draft bill change, this piece will be updated.
