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Your Questions Answered – The Tenant Fee Ban

31 May 2019

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On June 1st The Tenant Fee ban will come into force in England, banning fees charged by letting agents and landlords to their tenants. Take a look at our guidance below on things that you need to be aware of as a Landlord.   

Does the fee ban apply to agents and landlords?

Yes, it will apply to both agents and landlords.

Will the ban apply to older tenancies?

Not straight away. It will apply to renewals of tenancies, and after a year the ban will attach to pre-existing tenancies and clauses that charge fees will become ineffective. If a landlord or agent takes a prohibited payment after that date they will have 28 days to return it or be considered in breach of this legislation.

Can the rent be increased after an initial period to offset the ban?

No, you are not permitted to set rent at a higher level for the first portion of the tenancy and then drop it down later.

Deposits

Deposits will be limited to 5 weeks rent as a maximum amount for tenancies where the annual rent is below £50,000. This has gone up from the originally proposed limit of one month.

Deposits for tenancies where the annual rent is £50,000 or more are limited to the equivalent of 6 weeks rent.

Third party payments

There will be a number of third-party payments still required including;

Landlord and Agents

1.      A contractual clause in the tenancy agreement about the tenants paying the TV license

2.      A clause insisting that the council tax is an acceptable payment

Landlords only

  1. A clause requiring the tenants to pay for the landlord's costs from a specific service provider for utilities is a permitted payment.
  2. A clause requiring tenants to pay the landlord's cost for a specific communication service (phones, broadband, cable/Sky TV) is permitted for landlords.

If the landlord seeks to charge more than the billed costs for these services then any excess will be considered a prohibited payment.

Will there be financial penalties in place?

If a breach occurs and a banned fee or payment is taken, a tenant will be able to get the money back through country court. Local Trading Standards are supposed to assist tenants with this in some way once it comes into force.

The landlord or agent may be charged interest on this from the day that the prohibited payment was taken.

In addition, local trading standards will be required to enforce this legislation and will issue a fine of up to £5,000 for a first offence. Subsequent breaches are criminal offences or alternatively, the landlord can be fined up to £30,000 as a civil penalty and be subject to a banning order.

Will I be restricted from serving a Section 21 notice if I charge fees?

No, a Section 21 notice may be given so long as a prohibited payment was requested paid by a tenant and is still being held by the landlord or agent.

Landlords and agents can either refund the prohibited payment or, with the permission of the tenant, use that money as payment towards rent or the deposit.

 

This guidance is based on the current draft of the Tenant Fees Bill. It is current as of the February 2019 and could be subject to change

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