The pandemic has raised plenty of issues between landlords and tenants – many of which have come as a result of unscrupulous private landlords and tenants alike – have seen an increase in press coverage for stories such as a recent claim against a landlord over a death from pneumonia but, in truth, the vast majority of landlords should have little to worry about.
What is the Tennant Fees Act?
Introduced in 2019 and coming into effect in June of 2020, the Tenant Fees Act serves to ban letting fees and to cap the deposits paid by those tenants renting from private landlords in England. Aiming to reduce the cost that tenants can face both at the outset and during the course of a tenancy, the act serves to allow tenants to see, at a glance, what a property will cost.
Who does the ban on fees apply to?
The ban as represented by the act applies to all assured shorthold tenancies, tenancies for student accommodation and to licences to occupy housing in the private rental sector in England.
What fees can be charged?
The fees that can still be charged as of June 2020 are, simply, those essential for the proper letting of a property – and are as follows:
- Rent – a regular, agreed upon amount at agreed upon intervals. It is prohibited to charge a larger amount for the first month’s rent in order to cover any costs. The whole cost of the agreed period should be evenly split across the duration of the tenancy.
- A refundable tenancy deposit – this is a deposit which will be placed with a Government Custodial scheme DPS (Deposit Protection Scheme) which is capped at no more than 5 weeks’ rent (or 6 weeks rent if the annual rent is greater than £50,000).
- A refundable holding deposit (to reserve a property) – capped at 1 week’s rent
- Payments associated with early termination of the tenancy – if requested by the tenant,
- £50 (or reasonably incurred costs, if higher) can be charged.
- Payment of utilities, communication services, TV licence and Council Tax
- Early termination – if a tenant requests to leave before the end of their tenancy, an early termination fee can be levied – this cannot exceed the financial loss a landlord or agent has suffered in permitting the tenant to leave early.
What this means for Wirral landlords
As ever with this type of story, the news will grow as tenants begin to win cases against landlords that have breached the conditions outlined in the act. However, most landlords will have been acting in accordance with the standards set out in the act for longer than the two years since it was announced. Where it may be a concern for some landlords is in situations where legacy charges have been carried over during renewal for longer tenancies.
As the act rendered all additional charges ‘prohibited payments’ from the 1st of June 2020, there may be situations where prohibited payments may have been collected during the period since the beginning of the act’s enforcement. In these situations, the payments taken in error should be returned to the tenant as soon as the error is discovered to prevent the possibility of court action and the penalty of a year’s rent (in actual fact, there are possible financial penalties of up to £30,000) being applied.
If you’re worried about the shorthold agreements currently in place with your tenants, or any other legal documentation, you can Contact Us to see what we can do to help you with this – or any of the many other legal queries that can arise in the course of successfully managing a property portfolio.
