The Tenant Fees Act and how it might impact on you

houses of parliment
Apr 11 2019

The Tenant Fees Act and how it might impact on you

Ahead of the introduction of the Tenant Fees Act, which comes into effect on 1st June 2019, the government has issued some new guidance notes. These notes are supposed to help clarify and smooth the process of introducing the act.

From this date any new tenancies cannot have certain fees applied to new tenancies, however existing tenancies are still subject to contract fees until 1st June 2020 when all tenancies will have to abide the legislation. Will we see landlords and letting agencies rushing to issue new tenancy agreements to give them a little longer for charging fees?

The guidance notes expand on what fees can and cannot be applied can be read by clicking on the link. Read the full notes on the Tenant Fees Act.

The government has always claimed that the Acts objectives is to reduce the costs that tenants face during the whole tenancy process.

However, if a landlord is using these fees to balance their books, will the income achieved by these fees be added to rents? Will the market hold such increases?

In addition the government claim the Act rebalances the relationship between tenants and landlords? I think it will take more than this Act to rebalance the relationship, if anything it may further tip the balance in the favour of the tenant. With the exception of a few rogue landlords I believe there is already a healthy balance.

To summarise the fees that can be charge:

The rent,

refundable tenancy deposit, which is now capped based on the annual rent, (I know from many cases this cap will not cover damages left by some tenants or the loss of income when trying to evict a tenant)

refundable holding deposit capped at no more than one week’s rent,

-payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher, (reasonable is such a subjective word, depending on your interests, I can foresee two completely different understandings of reasonable. Then what happens, do both parties have to attend court?)

payments associated with early termination of the tenancy, when requested by the tenant, (Is this a fair balance?)

payments in respect of utilities, communication services, TV licence and council tax, (I am unaware of many landlords or agencies that pay this on behalf of a tenant)

a default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement. ( If the tenant is evicted for non-payment of rent, would the default fee rate continue until all rent is paid?)

The guidance notes mention that the policing of the ban will partly be conducted by Citizens Advice. Will they be taking on new staff to cover the additional work, or reducing the other services they provide to accommodate the inevitable increase in demand for their time?

It is interesting that the guidance notes repeats at least three times that you cannot evict a tenant using the section 21 eviction procedure until you have repaid any unlawfully charged fees or returned an unlawfully retained holding deposit. Does this mean that until a judgement has been made as to if the fees where unlawful that the tenant can remain in the property?

I think that until cases have been processed by the justice system, the new act will be an unknown.

What are your thoughts on the new Act?

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