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Imminent new legislation abolishing letting fees

29 April 2019

The Tenant Fees Act 2019 comes into effect on 1st June 2019 in England. The purpose of the Act is to prohibit landlords and letting agents from requiring a tenant under an assured shorthold tenancy, student let or a licence to pay unfair administrative fees. The aim is to make renting homes more accessible and affordable for tenants.

What fees are banned?

It will be illegal for a landlord or an agent to demand payment of any fees unless they are permitted under the new Act.

Permitted payments include:

  • Rent
  • Tenancy deposits limited to 5 weeks’ rent for an annual rent of up to £50,000
  • Returnable holding deposits limited to 1 weeks’ rent
  • Payments for default (meaning losing keys or late payment of rent), variation (assignment, novation) or early termination of the tenancy (subject to new statutory caps on the amount of those payments)
  • Payments in relation to council tax, utility bills, TV licences and communication services.

Failure to comply

If landlords or letting agents fail to comply they will be prevented from serving a s21 notice to evict their tenant (until any prohibited payment is repaid) and they could be prosecuted and fined up to £30,000.

What does the Act mean for tenants?

In theory this new legislation is a boost for tenants and could make renting more accessible and affordable. It is designed to make the amount tenants pay clear and transparent. However, in practice, landlords are likely to be forced to increase rents to cover the letting agent fees.

What does the Act mean for landlords?

Unlike in Wales where landlords must have an understanding of landlord and tenant law before they can rent a property without an agent, in England this regulation does not yet exist. It is likely, therefore, that a lot of landlords acting without an agent will be oblivious of the changes, and could continue to charge fees which could lead to a prosecution.

Landlords are also likely to see their own letting agency fees rise which will lead to an increase in rents.

There have been a raft of changes to tenancy law in recent years which have caught out poorly advised landlords and exposed them to severe financial penalties. If you are a landlord who is unsure of your legal obligations to your tenant we advise that you, for piece of mind, either instruct a solicitor to consider your particular circumstances or instruct a reputable letting agent to deal with the paperwork.

What does the Act mean for letting agents?

Letting agents are experiencing a rough time at present. Many smaller letting agencies will not be able to afford to absorb the loss of tenancy fees and will inevitably need to pass these on to landlords. The new legislation could see the number of landlords using letting agents fall in an attempt to mitigate their running costs.

What Barlow Robbins can do for you?

We have a team of specialist landlord and tenant lawyers. Whether you are a landlord, tenant or letting agent we can advise you on how this legislation might affect you when it becomes law. For further information please contact Gemma Richards email: gemmarichards@barlowrobbins.com or Simon Fulford email: simonfulford@barlowrobbins.com

For further advice on the above topics, please call us on 01483 543210 or alternatively email enquiries@barlowrobbins.com