Tenant Fees Act update - more tenancies affected from 1 June

The Tenant Fees Act 2019 has been in force for 1 year for new tenancies and contains prohibitions relating to landlords and to letting agents.  From 1 June 2020 it will apply to all relevant tenancies.

Tenancies affected are assured shorthold tenancies (except for social housing tenancies or leases of more than 21 years), student lettings and licences to occupy housing.

The Tenant Fees Act prohibits all payments unless they are a “permitted payment”.

What are permitted payments?

• rent
• tenancy deposit (capped at five week’s rent if the annual rent is less than £50,000, six weeks rent if it is £50,000 or more)
• holding deposit (capped at one week’s rent)
• payments in respect of certain breaches of tenancy (loss of keys, failure to pay rent, damages)
• fees for changes to the tenancy (these are capped)
• payment for early termination
• council tax and utilities, TV licence, and communication services

Enforcement

Firstly, any provision requiring a prohibited payment will not be enforceable.

Enforcement generally will be the responsibility of the local weights and measures authority (usually trading standards) and financial penalties of up to £5,000 for a breach can be levied.

If there is a second breach within a five year period, this is a criminal offence and if convicted a banning order can be made and an unlimited fine can be imposed.  Alternatively the local authority can impose a fine of up to £30,000 where an offence has occurred as an alternative to prosecution.

Repayment of the prohibited payment can be required, if necessary by making an application to the First Tier Tribunal.

Also there are restrictions on using the s21 possession procedure if the landlord is in breach of the prohibitions.

What do I need to do?

Review your tenancy agreements to ensure that they are compliant with the Tenant Fees Act and do not require prohibited payment to be made. Do not request payments to be made that are now prohibited. If you have received a prohibited payment, this should be returned to the tenant within 28 days.

If you need any specific help or advice on your position then please contact any member of our Real Estate Dispute Resolution team.