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The Tenant Fees Act – the latest must-know regulation

by | Jun 26, 2019 | Client Lenders, Clients

The recently introduced Tenant Fees Act is a key piece of legislation for the government. In effect since June 1st this year, it applies to all new tenancies and renewals from this date onwards. From 1st June 2020, it will also apply to pre-existing tenancies.

The aim of the Act is to reduce the costs that tenants can face at the outset, and throughout, a tenancy. Tenants will be able to see, at a glance, what a given property will cost them in the advertised rent with no hidden costs. Essentially, fee charges are prohibited unless the payment is expressly “permitted” under the Act. Holding deposits, rent, deposits and charges for defaulting on the contract are exempt, but they are subject to additional restrictions.

The party that contracts the service – the landlord – will be responsible for paying for that service, helping ensure the fees charged reflect the real economic value of the services provided and sharpen letting agents’ incentive to compete for landlords’ business.

From 1 June 2019, the only payments that landlords or letting agents can charge to tenants for new contracts are:

  • rent
  • a refundable tenancy deposit capped at no more than 5 weeks’ rent where the total annual rent is less than £50,000, or 6 weeks’ rent where the total annual rent is £50,000 or above
  • a refundable holding deposit (to reserve a property) capped at no more than 1 week’s rent
  • payments associated with early termination of the tenancy, when requested by the tenant
  • payments in respect of utilities, communication services, TV licence and Council Tax
  • a default fee for late payment of rent and replacement of a lost key/security device giving access to the housing, where required under a tenancy agreement

You can see all the official documentation relating to the Act on the government’s website here, including its guidance for tenants, landlords, letting agents and local authority enforcement officers explaining how the Act affects them.