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Tenant fees: overview

This content applies to England

The prohibition on landlords and letting agents charging certain fees to tenants and other relevant persons.

The Tenant Fees Act 2019 bans private landlords and letting agents from charging a ‘relevant person’ any fee unless it is a ‘permitted payment’.

Relevant person

A ‘relevant person’ is a:[1]

  • tenant
  • licensee
  • guarantor
  • any person acting on the tenant/licensee’s behalf.

The following authorities are not relevant persons, and are otherwise exempt from the provision of the Act:[2]

  • local housing authorities
  • the Greater London Authority
  • any organisations acting on behalf of the above two.

The exclusion of these authorities from the definition of 'relevant person' is not limited to any particular functions, but will often be relevant where authorities are exercising homelessness and prevention/relief functions.The effect of the exclusion is that where any such authority makes any payment on behalf of a tenant/licensee, it cannot be a 'prohibited payment'. That in turn means that the list of 'permitted payments' and the restrictions and caps in Schedule 1 to the Act do not apply.

In practice this means that any such authority can offer as much as it likes to private landlords and agents, not only in 'finders’ fees’ and other inducements, but also by way of a tenancy or holding deposit. They can make any payments in connection with any tenancy/licence for or on behalf of tenants/licensees and when guaranteeing their rent.

Tenancies and licences covered

The Act bans payments of fees in connection with:[3]

  • an assured shorthold tenancy
  • a licence to occupy housing (including lodgers)
  • a tenancy granted to a student by a specified educational institution.

Payments of fees in connection with the following are not covered:

  • other types of letting in the private rented sector, including fully assured tenancies
  • tenancies and licenses of social housing.

Permitted payments

A landlord cannot charge a relevant person a fee, unless it is expressly permitted by the Act.[4] The permitted payments are:[5]

  • rent
  • tenancy deposit (up to maximum of five or six weeks’ rent)
  • holding deposit (up to maximum of one week’s rent)
  • a fee in the event of a ‘relevant default’
  • damages for breach of agreement
  • in connection with tenant’s request for a variation, assignment, or surrender of a tenancy
  • in respect of council tax, utilities, communication services and TV licence.

For further details see Tenant fees: permitted payment

When the prohibition takes effect

The Act came into force on 1 June 2019.[6]

From 1 June 2019, a landlord/agent is banned from charging a fee, other than a permitted payment, where the tenancy/licence agreement started or was renewed on or after that date.[7]

Where a tenancy/licence is renewed for another fixed-term, this is treated as a new applicable agreement. If the deposit already held by the landlord/agent (i.e. paid in respect of a pre-June 2019 agreement) exceeds the five or six weeks’ rent cap and is to be ‘transferred’ to cover the new fixed-term, the landlord/agent is under an obligation to repay any amount above the cap. If the deposit is protected in a tenancy deposit protection scheme, the government guidance suggests a 10-day time limit for the refund to take place.[8]

A relevant person will not be protected if:

  • they signed the agreement (or agreed to it) before this date
  • a statutory periodic tenancy arises during the year after 1 June 2019.

In these situations, a landlord/agent can lawfully charge fees until 31 May 2020.

From 1 June 2020, the ban on fees will apply to all private rented sector ASTs, licences and student lettings, regardless of their commencement date.[9] Any term in an agreement requiring the payment of a prohibited fee will not be binding on a relevant person.

Enforcement and sanctions

There are a range of sanctions available against a landlord/agent who has charged a relevant person a prohibited payment. This includes:

  • civil payments of up to £5000 for an initial breach
  • civil payment of up to £30,000 or prosecution for a subsequent breach
  • restriction on the service of a section 21 notice
  • application by relevant person to the First-tier Tribunal to recover unlawfully charged fees.

The main enforcement agency is the local trading standards authority. For further details see Tenant fees: enforcement and sanctions.

Guidance

The government has published guidance on how the provisions of the Act can be applied for:

  • tenants (and other relevant persons)
  • landlords and letting agents
  • enforcement authorities.

Enforcement agencies must have regard to this guidance when exercising functions under the Act.[10]

[1] ss.9,10 and 28 Tenant Fees Act 2019.

[2] s.1(10) Tenant Fees Act 2019; para. 2.5, Tenant Fees Act 2019: statutory guidance for enforcement authorities, MHCLG, April 2019; p. 9, Tenant. Fees Act 2019: Guidance for landlords and agents, MHCLG, April 2019.

[3] s.28 Tenant Fees Act 2019; para.8, Sch.1, Housing Act 1988.

[4] s.3 Tenant Fees Act 2019.

[5] Sch.1 Tenant Fees Act 2019.

[6] Tenant Fees Act 2019 (Commencement No. 3) Regulations 2019 SI 2019/857.

[7] ss.1 and 2 Tenant Fees Act 2019.

[8] p. 30, Guidance for landlords and agents, MHCLG, April 2019.

[9] s.30 Tenant Fees Act 2019.

[10] s.6(4) Tenant Fees Act 2019.

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