The Tenant Fees Act is a year old and, following 12 months of being applied to new tenancies, it is now the law for all tenancies. This transition process was always intended to come to a halt at the end of May 2020, so letting agents and landlords have had notice that ongoing rentals will be affected, but it is worth recapping what is involved. This is why we have put together a guide to what has changed to the Tenants Fees Act in 2020.
The government introduced the Act to prevent landlords and letting agents charging tenants for the costs of referencing, creating inventories, carrying out credit checks and a host of other fees. The only fees allowable now are rental payments, a security deposit, a holding deposit of no more than one week’s rent to reserve the property, charges to change the tenancy, utility bills and a default fee for paying rent late or for losing a key if that has been stipulated in the tenancy agreement. But what has changed in the Tenants Fees Act in 2020? Read on to find out.
Existing Tenancies and the Tenants Fees Act
From 1st June 2019, the Tenants Fees Act came into law, applied to all new tenancies after that date. However, the Act did not apply to existing tenancies that were already running at the time. Landlords and letting agents could apply fees for services connected to the rental, unless it was for a renewal, which would have instantly put it within the jurisdiction of the Act.
From 1st June 2020, that all changed and landlords and letting agents must adjust accordingly. Any tenancies that have been on your books since before the start of the Act must now run according to the new rules.
If a landlord was charging tenants for gardening services, they will now have to bear the cost themselves. Other options are to negotiate with the tenant to take over the responsibility for maintaining the garden, but if there is nothing in the tenancy agreement to back that up, the tenant is under no obligation to do so. Similarly, if a landlord engaged the services of a cleaner for a property and passed on the cost to the tenant, this charge can no longer happen. Any tenancy agreement clause stipulating that tenants should carry such costs are now effectively null and void.
The Tenants Fees Act also brought in a cap on security deposits. This limited the amount a tenant had to put up in advance to five or six weeks’ rent, depending on the value of the annual rent that they pay. For existing tenancies, landlords and letting agents who have charged more than this amount do not need to pay back the difference unless the tenant renews with a new fixed term agreement. In this case, you should contact the relevant Tenancy Deposit Scheme to work out how much to refund.
Check-Out Fee Ban
Another area that has changed in the Tenants Fees Act in 2020 is the banning of check-out fees for existing tenancies. Where this is a requirement of a tenant to pay at the end of the tenancy, that should be disregarded. In cases where landlords and letting agents have already charged in advance for check-out fees on existing tenancies, they must repay the tenants within 28 days of the 1st June 2020.
If you have previously pre-charged tenants for these fees, you should know that failure to repay within the allotted time is seen as a breach of the Tenants Fees Act.
Fines for Breaching the Tenants Fees Act
There are a number of potential punishments for those breaching the Tenants Fees Act. The government can fine any breaches with a penalty of up to £5,000. If a landlord or letting agent continues to breach the Tenants Fees Act, they can find themselves hit with an unlimited fine and with potential criminal charges brought against them.
Where landlords or letting agents have charged a disallowed fee to a tenant, they will not be able to issue a Section 21 notice to recover the property until they have refunded the charge in full.
Help With Tenancies
A year on from its introduction, some important measures have changed in the Tenants Fees Act in 2020. Executive Property Management Solutions can help you keep on top of these changes and others in the industry. Simply outsource your property management services to us and we will make sure that side of your business runs smoothly. Find out more at the Make Lettings Easier section and talk to us about your needs by using the Contact box below.