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Tenants Fee Ban

May 3rd 2019
By: Morna Walters
Tenants Fee Ban

Initially, when the Act comes into force, it will only apply to new tenancies and renewals of tenancies, excluding statutory and contractual periodic tenancies that arise after 1st June 2019. After one year, in 2020, the ban will attach to pre-existing tenancies.

Below is a simple overview of what you need to know!

What is the Tenant Fees Act?

The Tenant Fees Act will make it illegal for landlords and letting agents to charge any fee other than rent, deposits, holding deposits and charges for defaulting on the contract.

However, all four of these are subject to additional restrictions as part of the new legislation, and landlords and agents will need to be mindful of these changes.

What fees will be banned?

Most fees, unless they are exempt, will be banned.

This includes: credit checks, cleaning services, inventories, admin charges and gardening services.

What additional restrictions will the Act bring in?

One of the main restrictions the Tenant Fees Act will bring in will be the amount that landlords and agents can charge for deposits. Deposits will be limited to five weeks rent as a maximum amount, for tenancies where the annual rent is below £50,000. If the annual rent is above this, then the maximum deposit that can be charged is six weeks rent.

Holding deposits will also be limited to a maximum of one week’s rent, and subject to statutory legislation on the repayment of this, should the tenancy not go ahead.

Rent restrictions

Landlords and agents will also not be able to set rent at a higher level for the first portion of the tenancy, and the drop it down afterwards. However, charging a higher rent than you would normally charge for the property, that is consistent throughout the tenancy, is fine.

What are the penalties for non-compliance?

Where a breach has occurred and a banned fee has been taken, tenants will be able to get any money wrongly paid back, via the county court. For a first offence, a fine of up to £5000 can be charged. However subsequent breaches could see landlords and agents faced with a fine of up to £30,000.

Do you have more questions?
 

Our Lettings team will be very happy to answer any questions you may have or if you just want someone to talk through how this will effect you.

You can call them on 01494 520555 or email them at lettings@jnp.co.uk