The Tenant Fees Act came into force on 1 June 2019. The Act bans landlords and agents charging tenants fees for entering, renewing, assigning or novating or terminating a tenancy in England. There are also restrictions placed on tenancy deposits.
The aim of the Act is to reduce the costs that tenants pay in respect of a tenancy. Our previous post on the Act can be read here. In this post we will only address 2 common issues which we have become aware of.
Transition period
We have come across some literature which appears to suggest that there is no transitional period. This is incorrect.
The Tenant Fees Act and therefore the ban on fees comes into force on 1 June 2019. This means that all tenancies which are executed or renewed on or after this date will be subject to the ban.
Where tenancies were entered into prior 1 June 2019, landlords or their agents will still be permitted to charge fees until 31 May 2020
On or after 1 June 2020 all tenancies will be subject to the Tenant Fees Act even where there is a contractual term in the tenancy agreement permitting payments that are otherwise banned under the Act.
Deposits
Where the annual rent is less than £50,000 a deposit is capped at 5 weeks rent for all new tenancies which are executed or renewed on or after 1 June 2019. Where the annual rent is £50,000 or above the deposit is capped at 6 weeks rent.
Where the deposit has been taken prior to 1 June 2019 the cap does not apply unless that tenancy is renewed after 1 June 2019.
Where tenancies that exceed the deposit cap are renewed after 1 June 2019 landlords or their agents will need to refund the amount of the deposit held which is over the relevant 5 or 6 week cap. If the deposit which exceeds the cap is held with a Government approved scheme it should be repaid within 10 days of the landlord and tenant agreeing upon the amount to be repaid.
Comment
The Tenant Fees Act will be a huge change for agents in terms of their documents, processes, and business models. Some aspects of the Act will take a while to become clear and it is possible that some of it will end up being resolved in the courts. In the meantime most agents will likely adopt a relatively conservative approach.
Published 6 June 2019
