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The Tenant Fees Act, applicable to England’s private rented sector, bans most letting fees and sets a maximum limit on tenancy deposits paid by tenants. It came into effect on 1 June 2019 and applies to new or renewed tenancy agreements.
The government’s Tenant Fees Act 2019: guidance is designed to clarify how this law impacts tenants, landlords, and letting agents. Additional useful resources include the How to Rent guide and How to Let guide.
The main objective of this Act is to reduce the initial and ongoing expenses that tenants often encounter during a tenancy. It ensures that tenants can easily understand the total cost of a rental property without any hidden fees, as these costs are now included in the advertised rent.
Under this legislation, landlords are responsible for covering the costs of contracted services, eliminating the burden of tenant fees. This system aims to ensure that the fees charged accurately reflect the actual economic value of the services provided and encourages letting agents to compete for landlords’ business.
To enforce this law, local enforcement authorities hold the primary responsibility. Additionally, an independent lead enforcement authority has been established to offer advice and information to local authorities regarding the Act. Bristol City Council has been appointed as the lead enforcement authority for lettings.
Starting on 1 June 2019, new tenancy contracts are subject to specific allowable charges that landlords or letting agents can levy on tenants. These charges include:
– Rent payments
– A refundable tenancy deposit, limited to a maximum of 5 weeks’ rent if the total annual rent is below £50,000, or 6 weeks’ rent if the total annual rent is £50,000 or more.
– A refundable holding deposit, capped at a maximum of 1 week’s rent, to reserve a property.
– Payments related to early termination of the tenancy, initiated by the tenant.
– Payments not exceeding £50 (or reasonable costs incurred if higher) for the variation, assignment, or novation of a tenancy.
– Payments for utilities, communication services, TV license, and Council Tax.
– Default fees for late rent payment and replacement of a lost key/security device necessary for property access, as specified in the tenancy agreement.
The Renting Homes (Fees etc.) (Wales) Act, commonly known as the Renting Homes Act (Wales), is a piece of legislation that was introduced in Wales to regulate the fees and charges associated with renting residential properties in the private sector. It received Royal Assent on 24th April 2019 and came into effect on 1st September 2019.
The main aim of the Renting Homes Act is similar to the Tenant Fees Act in England, which is to protect tenants from unfair fees and charges imposed by landlords and letting agents. The key provisions of the Renting Homes Act are as follows:
The Renting Homes Act (Wales) was introduced to create a fairer and more transparent renting process for tenants in Wales and to prevent them from facing unexpected and excessive fees when entering into a new tenancy. It aims to improve the rental market’s overall standards and protect tenants’ rights throughout their renting experience.
All upfront letting agent fees, such as administration fees, referencing, credit check, and guarantor fees, must be covered by your landlord; it is unlawful to pass these costs onto tenants. Deposits that exceed five weeks’ rent are not permitted, except for luxury rentals with an annual cost exceeding £50,000, where the deposit is capped at six weeks’ rent. Holding deposits, intended to reserve a property, should not exceed one week’s rent.
Landlords or agents who charge prohibited fees can be fined up to £5,000 for the first breach of the tenant fees ban and up to £30,000 for subsequent breaches.
The cap on tenancy deposits limits the maximum amount that a landlord or letting agent can charge a tenant as a security deposit. In England and Wales, as of my last update in September 2021, the deposit cap is as follows:
Similarly, holding deposits are now capped at one week’s rent, which marks a significant change since most holding deposits used to exceed this limit. According to an OpenRent poll conducted before the Tenant Fees Act (TFA) took effect, 47% of tenants had paid holding deposits that amounted to over £750, far surpassing the average weekly rent for a UK property.
You can still be charged for the following:
In addition, your landlord or agent can charge you for the following:
Moreover, tenants are generally responsible for paying their utility bills, broadband, phone, TV license, and council tax unless explicitly included in the rent and stated in the tenancy agreement.
Landlords or agents found charging tenant fees in violation of the law will be subject to substantial fines.
The initial breach constitutes a civil offence, resulting in a fine of £5,000.
Should the offence be repeated within a five-year period, it may escalate to a criminal offence, leading to a fine of £30,000.
Furthermore, measures are being considered to assist tenants in reclaiming any unlawfully charged fees from the landlord (or agent).