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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  • When I originally became a Landlord, there was only the HMO regulations on the statutes in the UK, although they did not affect my business at that time. During that period I experienced “life” as both a; tenant, on several occasions, and as a Landlord. I managed to live my life without undue difficulties as both. Consequently, I fail to understand why the raft of legislation has been layered upon Landlords, to overcome what we have been told were, wide spread, gross abuses of tenants. None of which, I ever experienced. A situation that has lead me to believe, that the claimed level of tenant abuse, has been a manufactured construct, in order to achieve a purely political objective. The situation certainly meets the Fascist ideal of collectivism, where there is property/business ownership but the State, by proxy, actually runs it, through regulations and taxation. Remember the Fair Rent legislation of the 1970’s? That legislation, that was aimed at protecting tenants,effectively destroyed the private rental market in the UK. The result being, the very people it was “aimed” at protecting had almost nowhere to live. A situation that the UK appears to be fast approaching again. Although, the tenants who have been disenfranchised of their ability to rent rooms that they can afford i.e. smaller ones by the minimum room size regulations of the HMO statute, are now housed in Travel Lodges at the tax payer expense. Has this situation been given air time in the UK?

    I now live in the USA, thankfully, where the rental market is not burdened by the heavy hand of Government. Rather like the UK when I started my venture into property rental. Strangely enough, the rental market here, works just fine, just like it did in the UK in in the 1980’s. This scenario would raise the valid question of, why such regulations are necessary, when life did work just fine in the UK without them, and does here right now? I guess one economic externality (failure) it had on the UK rental market has been, the creation of; uneconomic, unproductive jobs at the Deposit Protection Agency. If you have ever had the “pleasure” of dealing with them. Then you’ll completely understand why you need less Government interference in the rental market, or any market, and not more. Left alone, free markets will produce efficient results for all parties within an economy. Supply will balance demand, at a equitable price of exchange.

    13th April 2019 at 12:27 am

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