What Fees Are and Aren’t Allowed According to the Tenant Fees Act 2019

We outline what fees are allowed under the Tenant Fees Act (2019) as well as what common fees this act prohibit and the penalties per breach.

Landlord Tenant Law

What is the tenant fees act of 2019?

The Tenant Fees Act is a set of rules and regulations limiting the allowable fees letting agents and landlords can charge tenants during or before a tenancy. The Tenant Fees Act was introduced in 2019 and came into full effect for all residential lets in June 2020. The act applies to England only and also sets a cap on the allowable tenancy deposit.

Any allowable fee not outlined in the Tenant Fees Act is prohibited and a breach of the act will incur a penalty of up to £5,000 – successive breaches could result in additional fines or even a criminal offence.

It is vital for all landlords to know what fees are and aren’t allowed in order to remain compliant with the law. In this article, we outline what fees are allowed as well as what common fees this act prohibits.

Who does the Tenant Fees Act apply to?

The Tenant Fees Act applies to assured shorthold tenancies, student accommodation tenancies, and licences to occupy housing in the private rented sector.

The act only applies to landlords and letting agents that are in England. There are already existing fee bans in Scotland. A similar fees act was also passed in Wales with a few key differences, such as no limit placed on deposits. If your property is in Wales make sure to check out the details of the Renting Homes (Fees Etc.) (Wales) Act 2019.

What fees can be charged?

There are a number of central business fees which are still allowable under the tenant fees act. These include:

  • Rent.
  • A refundable tenancy deposit. However, the act introduced a cap on deposits equalling 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 (collected in order to reserve a property) capped at no more than 1 weeks rent.
  • Payments associated with the early termination of the tenancy. This is only allowable when requested by the tenant.
  • Payments in respect of utilities, communication services, TV licence and Council Tax.
  • Fees for changes to the tenancy. This could be for example the introduction of a pet, permission to run a business from the property, or other amendments to the tenancy contract that alter the contractual responsibilities. These fees are capped at £50 unless the landlord can prove that the resulting cost was reasonable and higher.

Other fees that are allowable but only if written into the tenancy agreement include the following default fees:

  • Late rent fees. Late rent fees can only be charged if 14 days or more have passed and are limited to a maximum of 3% above the base rate.
  • Replacing locks/security fobs. Again these fees are limited. The government guidance states, for example, that a new standard door key could be valued between £3-£10, a specialist door key between £5-£20 or a replacement key fob up to £50; there may be circumstances where it is necessary to pay more, but any and all claims must be reasonable and supported with evidence from the landlord.

What fees are prohibited under the tenant fees act?

Any fees not listed on the government’s ‘permitted’ fees list are prohibited. As such a few common fees landlords and agents are NOT able to charge fees for:

  • Property viewing
  • Tenant referencing
  • Administration charges
  • Guarantors (this can be a condition of the tenancy but you cannot charge fees for meeting this condition)
  • Inventory checks (both check in and check out)
  • Right to Rent checks (the landlord or agent are liable for this cost unless the tenant fails the check)
  • Pet fees/deposits
  • Renewal/exit fees
  • Interest on permitted payments
  • Professional end of tenancy cleaning
  • Third-party fees (unless the tenant chooses to undertake the services themselves)
  • Gardening services (unless included within the rent)

For a full list of permitted and prohibited fees please visit the GOV.UK website for guidance.

Additionally, whilst they can advise, landlords cannot make it a requirement of the tenancy that the tenant takes out insurance although they may choose to do so voluntarily.

Cleaning fees

Tenants are responsible for returning the property in the same state as when they first rented it. As such it should be returned as clean as when they moved in. Landlords, however, cannot require a tenant to pay for professional cleaning when they vacate the property. They can request it to be cleaned to a professional standard but not that they pay for a cleaner. As always, fair wear and tear of the property are not accepted as damage.

If the property is not left in a reasonable condition, landlords can recover costs incurred in returning the property to its original condition. This includes carrying out repairs and recouping costs by claiming them against the tenancy deposit. The landlord though cannot claim against the deposit if the tenant returns the property in the same condition as when they first entered it apart from fair wear and tear.

Changes to tenancy deposits

An important part of the Tenant Fees Act is the cap placed on deposits. The total deposit you are allowed to charge is dependent on the annual rent for the property.

  • If the annual rent total is less than £50,000, landlords and letting agents are permitted to collect up to 5 weeks’ rent as the deposit.
  • In the annual rent total is more than £50,000, then landlords and letting agents are permitted to collect up to 6 weeks of rent as the deposit.

As before, any deposit that is collected must be placed in a government-backed tenancy deposit scheme (TDP) within 30 days of being collected. And returned within 10 days of both parties agreeing upon the amount of the deposit to be returned. If the amount is disputed the deposit must be held in a TDP scheme until the issues are resolved.

GOV.UK advise that you are able to calculate the total annual rent by using the following formulae:

  • total monthly rent x 12
  • total weekly rent x 52

What are the penalties for non-compliance?

Penalties for non-compliance are strict and severe. It is therefore important to know what fees are permitted. And remind yourself that if a fee is not on this list, it is prohibited.

Any breach of the Tenant Fees Act legislation is a civil offence that carries a financial penalty of up to £5,000 per breach. However, if multiple breaches are committed it could become a criminal offence.

According to GOV.UK “Where an offence is committed, local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution.” It is down to the local authority’s discretion as to whether they wish to prosecute or impose a financial penalty.

Additionally, failure to return the tenant’s holding deposit in due time will also be treated as a civil offence with a penalty of up to £5,000.

If fees are collected in breach of the Tenant Fees Act a landlord or letting agent will not be able to evict a tenant until after these fees have been repaid.

What is considered to be a breach of the ban?

Each request you make for a prohibited payment is a breach. For example, the following would be considered multiple breaches:

  • “charging different tenants under different tenancy agreements prohibited fees.”
  • “charging one tenant multiple prohibited fees for different services at different times.”
  • “charging one tenant multiple prohibited fees for different services at the same time.”
  • “charging one tenant one total prohibited fee which is made up of different separate prohibited requirements to make a payment e.g. £200 requested for arranging the tenancy and doing a reference check would represent multiple breaches.”

Where you are being fined for multiple breaches at once, and you have not previously been served a financial penalty, the financial penalty for each of these breaches is limited to up to £5,000 each.
If in doubt it is advisable to seek clarification from GOV.UK. Landlords, letting agents, and tenants can read the government’s comprehensive ‘Tenant Fees Act 2019: guidance’ here.

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