What landlords and tenants can expect from the tenant fee ban

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TPFG

2 months ago - 21-01-2019

While much of London and the South East has had its attention firmly focused on the ongoing Brexit process, another key piece of news came out of the Commons last week.

That's right, the tenants fee ban. And with it set to come into force on June 1, we've been planning ahead here at Ellis & Co.

Landlords and tenants should also be looking at how the tenant fee ban could affect them. Start by taking a look at our guide below...


Who is affected most by the tenant fees ban?

Predominantly, lettings agents will face the most change when the ban comes into action on June 1.

But there is also plenty for landlords and tenants to ponder when the legislation becomes enforceable in England and Wales after June 1. (Fees are already banned in Scotland.)


How will tenancies change?

New tenancies, and those being renewed, after June 1 will be subject to the new legislation.

After 12 months, the tenant fees ban will also apply to existing tenancies signed before June 2019 and these agreements will see any clauses within them relating to fees become void.


What fees come under the ban?

Below are some of the fees landlords and tenants will be familiar with. These will all be banned after June 1:

* 'Admin' fees

* Credit check fee

* Cleaning services fee

* Referencing fee

* Inventory fee

* Other 'services' fees (gardening, professional cleaning, de-flea)

* Guarantor form fee



What fees are not banned?

Rent is the obvious one, but tenancy deposits and holding deposits can, and should, also still be taken by landlords and agents.

One further thing the tenant fees ban does do, however, is tighten up how much money can be taken for deposits and holding deposits.

For 12 month rentals where a tenant is paying less than £50,000 in rent over the year, a maximum of five weeks' rent can be requested as a deposit.

If the annual rent tops £50,000, agents and landlords can request six weeks' rent as a deposit.

Holding deposits, which enable prospective tenants to consider a property without fear of it being let to someone else, are capped at one week's rent.

Moreover, should a landlord take longer than 15 days to make a decision on the tenant, or decide not to proceed, this holding deposit must be returned within seven days.

Tenants who decide not to proceed after lodging a holding deposit could face losing all or some of it.

Default fees can also still be charged by landlords and agents, although these, also, are capped.

Tenants who lose keys to their rental property could face a default fee, while those who fail to pay their rent on time could be charged a maximum of 3% above the Bank of England base rate in interest by their landlord.

A £50 default fee can be charged by landlords or agents when the tenant requests mid-tenancy changes to their agreement, although this fee can be upped if landlords can prove additional costs have been incurred.



What about deductions from tenant deposits?

This remains unchanged. Tenant deposits must still be held in a deposit protection scheme approved by the government and landlords have 30 days to lodge the money once received.

Landlords wishing to make deductions from a tenant's deposit can still do so for damage to property or unpaid rent, as well as other reasons.


Will those who still charge fees after June 1 be fined?

It's very likely they will, yes.

As well as that, tenants can claim their money back plus interest from the County Court.

Trading Standards can issue a fine of up to £5,000 for a first-time breach of the tenant fees ban, while fines of £30,000 and banning orders are possible for those who continue to ignore the rules.

Finally, section 21 notices to evict tenants will be unable to be used by landlords whose tenants have been charged fees after June 1 and are yet to receive their money back.


Content based on current draft of the Tenant Fees Bill (December 11, 2018). Should the draft bill change, this piece will be updated.


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