Landlords have to contend with a lot of regulations, and these are changing or updating regularly. Some landlords have left the industry citing the ever-changing requirements, and many have felt exasperated as to what they need to do to comply with regulations. Anyone who was hoping that there would be some respite concerning regulatory changes will not be pleased to hear that the Tenant Fees Ban comes into force from the 1st of June 2019.
The ban will apply to landlords and letting agents, and initially, applies to tenancy renewals which occur after the 1st of June. One year later though, the ban will apply will to all existing tenancies, and any clauses detailed within tenancy agreements.
Any landlord who collects an illegal payment from a tenant will have 28 days to repay the money. Failure to repay this money results in the landlord being in breach of the Tenant Fees Act.
Landlords need to be aware that the ban covers many aspects
Landlords are no longer allowed to charge a fee for credit checks, tenant referencing, inventory checks, check-in processes, check-out processes, cleaning services, gardening services and any administrative fees.
This will change working procedures for many landlords, so landlords need to be aware of these changes, and be mindful of how they will operate their business. It is likely that many landlords will have to absorb these costs as part of their business operations.
Landlords can still charge some fees
Areas, where landlords can still charge a fee, include monthly rent payments, holding deposits, security deposits and charges relating to a tenant default.
When a charge applies to third-party work carried out, the landlord can only pass on the charge they face. A landlord is not allowed to place an additional fee on top of the initial cost of work. As an example, if a tenant loses their keys requiring the landlord to have another set cut, the landlord can only charge the tenant the cost of the new keys.
If a tenant wishes to change the terms of the rental agreement, such as leaving the contract early or swapping names on the agreement, the landlord can charge a fee. It is permissible for the landlord to charge a £50 fee, but if the landlord has incurred a more significant cost, they can charge up to this cost. Landlords are advised to retain receipts and maintain paperwork which indicates their losses that they are claiming for.
For holding deposits, landlords:
- Can only charge a maximum of one weeks' rent
- Must decide if the application is successful or not within 15 days of receiving the holding deposit
- If the application is unsuccessful, the landlord should return the deposit in full within seven days
- If the application is unsuccessful due to the tenant failing the Right To Rent test, the tenant not providing complete or accurate information or the tenant backs out of the agreement, the landlord doesn't have to return the full deposit
- If the application is successful, the landlord should return the holding deposit within seven days, but this money can be put towards the security deposit or the first months' rent
For security deposits, landlords:
- Can charge up to five week's rent when the annual rent is less than £50,000
- Can charge up to six weeks' rent when the yearly rent is £50,000 or more