tenants fee act 2019 explained

Published: 05/10/2021

Understanding the Tenant Fees Act 2019: A Guide for Landlords

The Tenant Fees Act 2019 brought huge changes to the private rental market in England, particularly in how landlords and letting agents interact with tenants. Aiming to increase fairness and transparency, this legislation has banned various fees commonly charged to tenants while limiting others, such as tenancy deposits.
This guide will break down the Tenant Fees Act 2019, empowering landlords with the knowledge to stay compliant and maintain smooth tenant relationships.

What is the Tenant Fees Act 2019?

Enacted on 1st June 2019, the Tenant Fees Act introduced significant changes regarding the fees that landlords and letting agents could charge tenants. Before the Act, it was normal for tenants to pay various upfront fees, including charges for viewings, administration, and referencing. These fees often place a significant financial burden on tenants, especially when moving into a new property.

The Tenant Fees Act was introduced to foster a fairer and more transparent rental market. It achieves this by prohibiting many of the charges that landlords and letting agents used to levy on tenants while also placing limits on others. The Act applies to all privately rented properties in England, providing clear guidelines on what landlords are permitted to charge.

Which Tenant Fees Are Now Banned?

The Tenant Fees Act has banned some common fees that landlords and letting agents used to charge tenants. These include:
  • Admin Fees: Landlords or agents cannot charge tenants for preparing contracts or handling paperwork related to the tenancy.
  • Viewing Fees: Charging tenants to view a property is no longer allowed.
  • Referencing Fees: The landlord or agent must absorb the costs of referencing a tenant, including credit checks and employment verification.
  • Renewal Fees: Landlords can no longer charge tenants to renew a tenancy agreement.
  • Third-Party Service Fees: Fees for services such as inventory checks or cleaning are prohibited unless they are linked to specific tenant-related costs (e.g., damage caused by the tenant).
Failure to comply with these rules may result in significant penalties, making it crucial for landlords to apply only legally allowed charges.

Permitted Payments Under the Tenant Fees Act

While the Tenant Fees Act bans a number of charges, it also permits certain payments, which landlords can charge for. These include:
  • Tenancy Deposit: Landlords can still charge a tenancy deposit to cover damage or unpaid rent. However, the deposit amount is capped at five weeks' rent for properties with an annual rent of under £50,000 or six weeks' rentfor properties with a higher yearly rent.
  • Holding Deposit: A holding deposit can be requested to reserve a property for a potential tenant, but it is capped at one week's rent. The law specifies when and how this Deposit must be refunded.
  • Early Termination Fees: If a tenant needs to terminate their tenancy early, landlords may charge reasonable costs associated with finding a new tenant or covering the rent lost during the transition period.
Other charges that landlords may impose in specific circumstances include:
  • Late Rent Fees: If rent is more than two weeks late, landlords can charge interest at a rate up to 3% above the Bank of England base rate, calculated on a pro-rata basis.
  • Lost Keys or Security Devices: Landlords may charge for replacements if a tenant loses keys or damages security devices. The costs must be reasonable, and landlords are required to provide evidence, such as receipts.
  • Changes to Tenancy Agreement: If a tenant requests changes to the agreement (e.g., adding a new tenant or allowing a pet), landlords can charge up to £50 for administrative costs. Higher charges can only be applied if the landlord can demonstrate their actual costs exceed this amount.
In addition, optional services can be charged, but these must remain genuinely optional for tenants, such as offering professional cleaning services when tenants vacate the property.

Can Landlords Include Bills in the Rent?
Yes, landlords are allowed to include certain bills as part of the rent. However, these charges must be clearly outlined in the tenancy agreement and reflect the actual cost of the service. The Tenant Fees Act permits landlords to charge for:
  • Council tax
  • Utility bills (gas, water, electricity)
  • Television license
  • Communication services (such as broadband)
The amount charged must match the actual cost of these services. Any excess charges could be considered a prohibited payment.

What Are the Penalties for Charging Banned Fees?

If landlords or letting agents charge illegal fees, they could face substantial penalties. A first breach of the law is a civil offense punishable with a fine of up to £5,000. If the same offense is repeated within five years, it can become a criminal offense with an unlimited fine.

Additionally, local authorities can impose a fine of up to £30,000 without pursuing a formal prosecution. Tenants who have been charged illegal fees also have the right to seek reimbursement.

Charging illegal fees can complicate eviction, particularly when issuing a Section 21 notice (no-fault eviction). The court may refuse to grant a possession order if a tenant proves that illegal fees were charged.

What Happens If a Tenancy Began Before 1st June 2019 and the Deposit Exceeds the Limit?

For tenancies that started before 1st June 2019, landlords do not need to return any excess deposit unless the tenancy is renewed. If the tenancy becomes periodic, it is not considered a "new tenancy" under the Tenant Fees Act. However, if the tenancy is renewed, the Deposit must not exceed the new limits—five weeks' rent for properties with an annual rent under £50,000, or six weeks' rent for properties with higher annual rent.





*Disclaimer: This information is for guidance purposes only.
0203 137 7877 info@circalondon.com
Select WhatsApp Group