The Tenant Fees Act was introduced in 2019, and it is vital landlords comply with the Act. It is easy to see why many landlords feel under pressure in serving tenants and complying with rules and regulations. Landlords have a lot of responsibilities, and with changes and updates creating work for landlords, it is helpful to review how you perform in line with regulations.
What payments are permitted with the Tenant Fees Act?
A good starting point for landlords determining whether they comply with Tenant Fees Act is to ensure you know which payments you can charge.
In the initial year of tenancy, a landlord is not allowed to charge a higher fee at the start of the lease, than they do for a later month or months. This rule is in place to prevent landlords for charging a higher initial rent to recoup fees which they can no longer charge for.
There is no cap on the monthly rental fee a landlord can charge tenants. Given the disparity of rental properties and rental fees from area to area, this is understandable. It is best for the landlord to charge a justifiable fee, but many factors influence average and expected rental fees, so there is freedom for landlords when setting a rental fee.
Of course, if a landlord charges a fee which tenants are unwilling to pay, the rental property is likely to lie empty.
There is a cap on security deposits for rental property under the Tenant Fees Act.
When the annual rent is less than £50,000; the security deposit is capped at five weeks’ worth of rent. If the yearly rent is £50,000 or more, the security deposit is capped at six weeks’ worth of rent.
The landlord must place the security deposit into a Government approved scheme within 30 days, and the tenant must be informed of the scheme details.
There is a cap on the holding deposit a landlord can charge a tenant to hold the rental property for them, and this is set at one week.
There are rules in place regarding the return of the holding deposit.
The holding deposit should be returned in full, within seven days, of:
• Entering into a tenancy agreement with the tenant
• The landlord deciding to withdraw from the proposed agreement; or
• The ‘deadline for agreement’ passing without a tenancy having been entered
There are occasions when a landlord can retain the holding deposit:
• If the tenant provides false or misleading information in their application
• If the tenant fails the Right To Rent check
• If the tenant withdraws from the property
• If the landlord takes all appropriate steps to enter the agreement while the tenant doesn’t
If the tenancy agreement begins, the landlord should return the holding deposit. However, the holding deposit is often used to offset the security deposit or the first month’s rent.
Other permitted fees include:
• Changes to the tenancy, which is capped at £50 unless the landlord can prove the cost was higher
• Council Tax
• Early termination of tenancy fee / Surrender fee
• Late payment of rent
• Replacing locks or security fobs and keys
• TV licence fee and communication fees
• Utility bills
When a landlord has incurred a cost, they can only charge the tenant this fee. It is recommended landlords retain receipts so they can prove the cost of services, when charging tenants.
Landlords cannot charge for the following services:
• Administration charges
• Gardening services, unless included within the rent
• Interest on permitted payments
• Inventory checks
• Professional end of tenancy cleaning when carried out as standard, not a breach of tenancy agreement
• Property viewing
• Renewal/exit fees
• Right to Rent checks
• Third party fees
Being a landlord is challenging, and there are more regulations and rules in place to protect tenants. If you need assistance in managing your property and complying with the Tenant Fees Act please contact Nationwide Accommodation Services Ltd, and we’ll be happy to help.
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