What is the Tenant Fee Ban?

The ban on tenant fees applies to Assured Shorthold Tenancies (ASTs) only, which are signed (by all parties) on or after 1 June 2019, regardless of the tenancy start date.

If you have an agreement to let to a company or the rent is over £100,000 per annum the tenant fee ban will not apply. If, after 1 June 2019, the terms of your tenancy agreement change and fall in to the category of an AST, the tenant fee ban will then apply.

What are the new rules?

From 1 June 2019 it is illegal for letting agents or landlords to charge fees to tenants apart from a small number of fees which are referred to as ‘permitted payments’.

What are permitted payments?

• Rent
• Utilities, communication services, council tax and TV Licences
• Deposits will be limited to five weeks’ rent for any tenancy with an annual rent of up to £50,000 per annum. If the rent is between £50,000 and £100,000 per annum, the deposit is limited to six weeks’ rent.
• Holding deposits will be capped at one week’s rent and can only be held for up to 15 calendar days, unless agreed otherwise in writing.
• Making changes to the terms of the tenancy, including tenant swaps will be capped at £50 including VAT.
• If the tenant requests an early termination, tenants will need to pay the agreed rent until a new tenant is found, or until the end of the fixed term or notice period is reached.
• The tenant can be the charged the actual cost of a lost key(s) or security device(s) as well as the cost of the call out of a locksmith, if required.
• If the tenant falls in to rent arrears of 14 days or more, interest at 3% over the Bank of England Base Rate can be charged, back dating it to day 1 of arrears.

What does this mean for your current tenancy?

If your tenancy is an AST and was signed before 1 June 2019, you/ the letting agents will be able to charge the fees written in to the agreement (such as the check out fee) up until 31 May 2020.

If a renewal is signed on or after 1 June 2019, the new fees will apply as above. On renewal you/ a letting agent will also be required to repay any difference in the deposit to the tenant if they have paid over the new limit as detailed above.

If your tenant has a tenancy which is signed on or before 1 June 2019 and isn’t due to be renewed before 31 May 2020, the deposit will need to be refunded once it reaches the end of the fixed term and is renewed.

What do I need to do now?

Nothing right now, changes will come to effect when your tenancy renews or if your tenant serves notice to end their tenancy.

Other important updates landlords should be aware of:

End of Section 21?

Last month the government announced a potential abolition of Section 21 notices.  If the proposed plans go ahead, landlords will no longer be able to serve a Section 21 to get possession of their property. Under the proposal, the Section 8 notice will be amended to allow landlords possession of their property so they can sell it or move into it themselves. This is currently under consultation and therefore nothing has yet changed.

Fitness for Human Habitation

On 20th March 2019 the Homes (Fitness for Human Habitation) Act 2018 came in to force in England, with the aim to improve living standards in rented accommodation adding to a landlord’s obligations under the landlord & tenant act 1985.

It essentially means that a landlord must make sure his property (and any common parts he has an interest in) is fit for human habitation at the beginning, and for the duration of, any tenancy. 

This includes (but is not limited to) good repair, ventilation and drainage, freedom from damp, and freedom from any hazard that could harm the health or safety of a tenant Under the new Act, if a tenant does report a hazard, it must be attended to within a reasonably acceptable timescale as a tenant can now take direct legal action if a landlord fails to comply.

It is also worth remembering that under the Deregulation Act 2015, if a tenant has reported any repairs and they have not been attended to, a landlord could be unable to serve a Section 21 notice to get possession of an Assured Shorthold Tenancy.

Right to Rent

In recent weeks there has been much press coverage on the Immigration Act 2014, which brought in that Right to Rent checks must be carried out on all tenants and occupiers. 

On 1 March 2019, the High Court delivered a verdict in the case brought by several parties including the Joint Council for Welfare of Immigrants (JCWI) and Residential Landlords Association. 

The High Court held that the Right to Rent scheme is in breach of the Human Rights Act as it can lead to discrimination if landlords and agents chose tenants because of their immigration status.

They agreed that this must be investigated further before being rolled out to Wales, Scotland and Northern Ireland, where currently these rules don’t apply.

For now landlords and lettings agents are still required to carry out Right to Rent checks on tenants and occupiers under the Act, however, we could see a change to this depending on what happens next.

We will keep you updated on the progress of this, but if you have any questions about Right to Rent and what we do for you as your agent, please contact us.

If you'd like any further help or friendly advice, contact a Knight Frank office near you or visit our dedicated services for landlords area.