The Tenant Fees Act 2019 prevents residential letting agents and private landlords from charging most upfront fees to prospective tenants in England. Unless a payment is ‘permitted’ it is prohibited.
The provisions apply to all new assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England created on or after 1 June 2019, and to renewals of existing tenancies (excluding any statutory periodic tenancies that arise after a fixed-term assured shorthold tenancy comes to an end).
Fees may still be payable if the tenancy was entered into before 1 June 2019 where these are required under an existing tenancy agreement. After 1 June 2020, all tenancies will be subject to the Act’s provisions.
The Government has published guidance on the Tenant Fees Act 2019. The key points for tenants are summarised below.
The permitted fees
Letting agents and landlords can charge the following fees:
- Tenancy deposit of no more than five weeks’ rent (refundable) where the annual rent is less than £50,000, or six weeks’ rent where the annual rent exceeds £50,000. Deposits on an assured shorthold tenancy in England must be protected in a Government approved scheme.
- A holding deposit of no more than one week’s rent (paid to reserve a property).
- Payments in the event of a default. These are restricted to the loss of a key or other security device giving access to the dwelling, or a failure to pay the full rent due within 14 days beginning with the date on which the payment is due. Payments must be evidenced in writing and must have been reasonably incurred by the landlord or letting agent. The interest payable on overdue rent is restricted to an annual percentage rate of 3% above the Bank of England base rate.
- Payments for variation, assignment or novation of a tenancy capped at £50 or the reasonable costs incurred if higher.
- Payments on termination of a tenancy at the tenant’s request, capped at the landlord’s loss.
- Council Tax payments.
- Payments for the provision of utilities if the tenancy agreement provides for these payments.
- Payments towards energy efficiency measures under a green deal plan if the tenancy agreement provides for this.
- Payments for a television licence.
- Payments for communication services, e.g. telephone, internet, cable/satellite television.
What if a tenancy began before 1 June 2019?
If the tenancy is renewed the provisions of the Act apply on renewal. However, fees may still be payable, e.g. for a tenancy renewal, if the tenancy agreement entered into before 1 June 2019 provides for the payment of renewal fees.
The provisions will apply to all other tenancies from 1 June 2020. Until this time, letting agents and landlords can charge pre-existing tenants’ fees, for example: for inventory checks; check out fees; and default fees for loss of keys if these are provided for in the tenancy agreement.
How is the ban enforced?
Enforcement is by local authority Trading Standards Officers. A breach is a civil offence attracting a financial penalty of up to £5,000.
If a breach is committed within 5 years of the imposition of a financial penalty or conviction for a previous breach, it will be a criminal offence. This is a banning order offence and is subject to an unlimited fine. Local authorities also have the option of serving a Civil Penalty Notice of up to £30,000 as an alternative to prosecution.
Breach of a requirement to repay a holding deposit is a civil offence liable to a fine of up to £5,000.
There are restrictions on the service of a section 21 notice of intention to seek possession where a prohibited payment is outstanding.
A duty to publish a tariff of fees
Since 27 May 2015, letting agents in England have been obliged to publish their fees on their premises and websites.
The Property Redress Scheme has published two guides on how agencies can make their fees as clear as possible:
- Unfair Lettings Fees; a Guide for Agents and their Landlords (PDF 591 KB)
- Unfair Lettings Fees; a Guide for Agents and their Tenants (PDF 574 KB)
Complaining about fees if they are still payable
If either a tenant or landlord feels that fees were not made clear at the outset, and if they cannot resolve the dispute with the letting agent directly, they can lodge a complaint with the relevant redress scheme. Since 1 October 2014, letting agents in England have been required to be a member of a Government approved redress scheme. There are two approved schemes:
Redress schemes are independent bodies that help reconcile disputes. They do not have the authority to impose actions on an agency. They can remove an agency from their scheme; if an agency cannot subscribe to a redress scheme they cannot continue their letting operations.
Alternative ways to complain
It may be possible to complain to the local authority’s Trading Standards officers. Consumer protection law may apply if false or misleading information was given, or a letting agent has not acted with an appropriate standard of care and skill. More information on what constitutes fair trading can be found in the Competition and Markets Authority’s guide, Consumer protection law guidance for letting professionals (PDF 7.36 MB), in particular page 51.
Legal action may be an option: Shelter has a guide to Complaints about letting agents.
Letting fees in the devolved administrations
In 2012, the Scottish government clarified the law so that all tenant charges, other than rent and a refundable deposit, have been unlawful from 30 November that year.
For further information about the role of letting agents and the ban on fees, Shelter Scotland has a guide to using letting agencies on their website.
The Renting Homes (Fees etc.) (Wales) Act 2019 came into force on 1 September 2019. The provisions are similar to those in the Tenant Fees Act 2019 – the impact is to ban certain fees in Wales. The Welsh Government has published Letting fees: guidance for landlords and letting agents (PDF 674 KB)
The Department for Communities (DfC) in Northern Ireland is proposing to bring forward legislation to ban letting agent fees. The consultation paper, Private Rented Sector in Northern Ireland – Proposals for Change (PDF 358 KB), was published in January 2017 and responses were invited up to 3 April 2017.