The Tenant Fees Act 2019 came into force on 1 June 2019 and affects all residential landlords of Assured Shorthold Tenancies, student lettings and licensors (for example with lodgers) in England. The Act applies to any new tenancies granted after that date and there is a grace period of one year for existing tenancies before the provisions will apply to them- so any landlords with existing tenancies have some time to consider the changes before it affects them.
The important thing to know is that the Act restricts the payments a landlord or letting agent can ask a tenant to pay and restricts contracts with third parties that a tenant can be required to enter into for services and insurance.
The default position is that all payments are prohibited unless expressly permitted by the Act – which is why its crucial to take time to understand the Act and its effects.
Landlords will be relieved to note that Rent and deposits are payments which fall into the ‘permitted’ category but there are restrictions, for example landlords aren’t allowed to charge a higher rate for one month and then a reduced rate for the remaining term within the first year of the tenancy, as the difference between the monthly rents will be a prohibited payment. A rent increase or reduction that is set out in the tenancy agreement is allowed, or landlords can agree with the tenant to increase or decrease the rent after the tenancy has been entered into. If a fee is not listed as permitted under the Act, it will be prohibited. One of the most notable banned fees is admin charges for letting agents (although renewal fees are allowed).
There are some contracts with third parties that a tenant can be required to enter into including contracts for utilities with certain suppliers or communication services (e.g telephone, TV and internet), but its only landlords that can require this, not letting agents.
Landlords face another hurdle as a result of the Act as they will not be able to serve a section 21 notice on tenants to terminate the tenancy unless all or part of any prohibited payment or deposit has been repaid or applied towards rent or deposit with the tenant’s consent. It’s easy to see why landlords may feel daunted by another raft of new measures imposing more obligations on them.
If you are unsure about how the Act affects you or would like further advice on the Act’s provisions and effects, please contact Sara Malik, or call 0191 232 8345 for more information.