Tenancy Fee Ban – What you need to know
It's after the 1st June 2019, which means that the Tenancy Fee Ban is now in place. The Tenant Fees Act is designed to help reduce the up-front costs of tenancy for renters who renew or begin a new tenancy after June 1st 2019. In addition, this Act will also reduce ongoing charges that tenants face during their tenancies as well. It’s a simple “no hidden charges” process. We break down what you need to know ahead of the changes and what you should look out for following the Tenancy Fee Ban.
What can I charge for?
Aside from rent there aren’t a huge number of additional charges you can make. Here are the charges which are not restricted under the Tenancy Fee Ban:
- You can charge a refundable tenancy deposit. This must only be up to 5 or 6 weeks’ rent depending on the total annual rental cost of the property.
- Refundable holding deposit: This is for holding a property for reservation. This cannot be more than 1 weeks’ rent.
- Changes to the tenancy charges but only when requested by the tenant and no more than £50, plus reasonable costs incurred (but these must be justified).
- You can charge for early termination of the tenancy but only when requested to end the tenancy by the tenant. This should not exceed the cost of the rent. You should also seek to replace that tenant to avoid them paying additional charges to you if you can.
- Payments for Utilities, TV Licence, Council Tax etc. when this is agreed in the tenancy agreement
- Fees for late rent payments. This should be outlined in the tenancy agreement and must only be applied after 14 days or more delay. This fee must also be calculated as interest of no more than 3% above the Bank of England’s base rate on the amount owed per day.
- Replacement keys/security device. Must be reasonable costs and the landlord must provide evidence to show the costs incurred (ie. Receipts).
So, what can’t I charge for?
Put simply, nothing outside of the above list. But, for some clarity, we have outlined below some areas which you should be particularly aware:
- Set Up Fees
- Check out fees
- Professional Cleaning
- Saturday Check Outs
- Third Party Services including credit checks
- Gardening, maintenance or chimney sweeping services
- Guarantor administration fees
In addition, you should be aware that you cannot require a tenant to take insurance from a third party and you cannot require a tenant to use a particular third party for any service they may require.
What about tenancy agreements in place before 1st Jun 2019?
You can continue with any charges outlines in the agreement if it was entered into before 1st June 2019 up to 31st May 2020. After this stage, even if renewing a contract, the Tenancy Fee Ban applies also.
What if I make a mistake?
We know that occasionally we make mistakes, and, under the Tenancy Fee Ban, you do have a 28 day grace period during which, should you have charged a fee in error, you can return the payment immediately without incurring treatment under the Act. We advise that you:
- Keep accurate records of all transactions and interactions between yourself and your tenants where fees or charges may apply. (ie. Receipts, agreements, bank statements, notes and correspondence.)
- Know where to go to find more information and, in the event of a claim against a breach of the Act, what your next steps are. Take a look here:
If you are not sure about how the Tenancy Fee Ban applies to you – speak with one of our experts for some advice here