Letting Fees Ban

Money iStock

The Tenant Fees Act 2019 prohibits landlords and lettings agents charging certain fees from 1st June 2019 in connection with a new or renewal of an assured shorthold tenancy or a licence in England.  The government state that this will ‘help improve transparency, affordability and competition in the private rental market and prevent agents from double charging both tenants and landlords for the same services.’ The Tenant Fees Act 2019 can be viewed here.

The Tenant Fees Act 2019 (TFA 2019) came into force on 1st June 2019 and applies to new and renewal tenancies and licences granted on or after this date and existing tenancies from 1st June 2020.  

Although the TFA 2019 introduces a ban on certain fees it does allow some permitted payments to be charged such as:

  • the rent;
  • a tenancy deposit of five week’s rent;
  • a holding deposit of one week’s rent;
  • the reasonable costs incurred for the loss of a key to, or other security device giving access to, the property;
  • a payment of £50 (or the reasonable costs – whichever is greater) where the tenant requests a variation or assignment of the tenancy;
  • the reasonable costs incurred where the tenant requests early termination of a fixed term tenancy or does not give the appropriate notice to end a periodic tenancy;
  • a payment in respect of council tax or a television licence;
  • a payment towards energy efficiency improvements under a green deal plan;
  • a payment for or in connection with the provision of a utility or a communciation service; 
  • and a payment of damages for breach of tenancy.  

These permitted payments are listed in Schedule 1 of the Tenant Fees Act 2019 and can be amended by the Secretary of State.

The Tenant Fees Act 2019 puts a limit on the amount of any holding deposit and any tenancy deposit that can be taken.  The tenancy deposit has been capped at five weeks’ rent since 1st June 2019 and the holding deposit capped at one week’s rent.  The requirements for returning the holding deposit are set out in Schedule 2 of the Tenant Fees Act 2019.  Schedule 2 requires the landlord to return the holding deposit:

(a) where the landlord and the tenant enter into a tenancy agreement before the deadline for agreement (the deadline for agreement is the 15th day after the holding deposit is received unless agreed otherwise) (deposit has to be returned within 7 days of the date of the tenancy agreement);

(b) the landlord decides not to enter into a tenancy agreement before the deadline for agreement (deposit to be returned within 7 days of the date on which the landlord decides not to enter into a tenancy agreement); or

(c) the landlord and tenant fail to enter into a tenancy agreement before the deadline for agreement (deposit to be returned within 7 days of the date of the deadline for agreement).  If the Tenant informs the landlord or agent before the deadline for agreement that they do not wish to enter into a tenancy agreement then the deposit is not required to be returned to the Tenant.

The holding deposit may be ‘repaid’ by using it towards the first rent payment or the tenancy deposit where this is agreed with the person who paid the holding deposit.  

The landlord does not have to refund the holding deposit if the tenant does not have the right to rent property under the Immigration Act 2014 provided that the landlord or agent did not know, and could not have been expected to know, that prior to accepting the deposit.  

Also, if the tenant provides false or misleading information or fails to take reasonable steps to enter into a tenancy agreement the landord does not need to return the holding deposit to the tenant.

The Trading Standards Office may impose a financial penalty on a landlord or letting agent if they are satisfied that a tenant has been required to make a prohibited payment or has failed to return the holding deposit. 

More detailed information is available in Letting Factsheet 51.