The Tenant Fees Act became law on June 1st 2019 and any new tenancies agreed from that date forward must not contain any requirement for payments listed in the Act as prohibited. If a new shorthold tenancy contract that is agreed or renewed after June 1stdoes contain requests for payments which are now banned, the landlord or agent could be fined £5,000, £30,000 or banned from the industry.
However, if you agreed a new tenancy contract in the 12 months prior to June the first, or renewed an agreement during that period, you won’t need to make any changes until the next renewal is due or a new tenant, requiring a new tenancy agreement, moves in.
Here is a quick reminder which fees and charges are now considered prohibited under the new Act:
- Right to rent checks.
- Pet deposits.
- End of tenancy cleaning or gardening costs.
- End of tenancy inventory check-out.
- Tenancy renewal fees.
12-month transitional period
The Tenant Fees Ban, allows for a 12-month transitional period. This means that any existing shorthold tenancy contract and licenses that were signed prior to June 1st 2019, that include fees that are classed as prohibited in the new Bill, can still be charged for the duration of the tenancy and no penalties will be due.
However, once a renewal is due then any prohibited fees previously written into the agreement must be removed, as that is considered a new contract, which is subject to the new rules.
In addition, where a student let has been agreed prior to June 1st, even if it doesn’t begin until September 2019, any prohibited fees that were in the contract can be charged until May 31st 2020.
From June 1st 2020, the Tenant Fees Act will come into force for all tenancies and any landlord or lettings agent found charging prohibited fees will face consequences.
The new rules also state that deposits can not exceed 5 weeks rent, or 6 weeks rent where the total annual rent is more than £50,000. The 12-month transitional period remains in place for this element of the ban too.
That means that where you agreed and signed a tenancy agreement before June 1st 2019, any deposit that was agreed and paid can remain with you for the initial period of the contract. However, once the initial fixed-term of the tenancy contract ends during the transitional period, but the tenant remains in the property, the landlord must refund any deposit in excess of the 5 weeks stipulated in the Tenant Fees Act.
It’s also worth reminding ourselves that only a one-week holding deposit can now be requested and held. Where the tenant has deliberately misled the landlord or agent, that holding deposit can be kept. But if the tenancy agreement doesn’t go ahead through no real fault of the potential tenant, it must be refunded.
As you can see, the transitional period has been put in place to help ensure landlords and agents have time to get all their contracts up-to-date without making big changes to existing tenancies all at once. However, all relevant tenancy contracts must only contain permissible fees from June 1st 2020. Failure to do this will result in penalties.