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Rules on fees for tenants

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 provisions 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.

However, the Act applies to registered providers of social housing (both local authorities and housing associations) where they are letting an assured shorthold tenancy in the private rented sector.[3]

Tenancies and licences covered

The Act bans payments of fees in connection with:[4]

  • an assured shorthold tenancy
  • a licence to occupy housing (other than an 'excluded licence')
  • a tenancy granted to a student by a specified educational institution.

Lodgers of resident landlords and tenants of houses in multiple occupation are covered.

The only ‘excluded licences’ in the private rented sector are Homeshare type of licences. The exclusion is intended to exclude certain charities that help facilitate home sharing arrangements in the private rented sector which have a social benefit, for example the prevention of loneliness of the elderly. These licences must be:

  • arranged between the licensee and licensor with the assistance or advice of a registered charity or Community Interest Company (usually a registered Homeshare organisation) in connection with the grant, renewal or continuation of the licence
  • arranged in order to provide the licensor with companionship sometimes combined with care or assistance (other than financial assistance), and
  • for no rent or other consideration, except for payments in respect of council tax, utility bills, a communication service or a television licence.

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
  • long leases
  • holiday lets.

Permitted payments

A landlord cannot charge a relevant person a fee, unless it is expressly permitted by the Act.[5] The permitted payments are:[6]

  • 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.[7]

From 1 June 2020, the ban on fees applies to the following agreements regardless of their start date:[8]

  • all private rented sector ASTs
  • licences
  • student lettings

Any term in an agreement requiring the payment of a prohibited fee will not be binding on a relevant person.

Between 1 June 2019 and 31 May 2020 the prohibition applied only to tenancies that started or were renewed on or after 1 June 2019.[9] It did not apply to statutory periodic tenancies arising between 1 June 2019 and 31 May 2020.

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] Ch.3, Tenant Fees Act 2019: statutory guidance for enforcement authorities, MHCLG, April 2019.

[4] s.28 Tenant Fees Act 2019; para.8, Sch.1, Housing Act 1988; Ch.3, Tenant Fees Act 2019: statutory guidance for enforcement authorities, MHCLG, April 2019.

[5] s.3 Tenant Fees Act 2019.

[6] Sch.1 Tenant Fees Act 2019.

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

[8] s.30 Tenant Fees Act 2019.

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

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

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