What fees can a landlord charge a tenant when agreeing a tenancy?
Many people are desperate to move home and estate and letting agents are reporting a massive rise in enquiries about rental properties. With limited available rental stock it is important that tenants understand what fees a landlord can charge a tenant when agreeing a tenancy and the associated tenancy agreement costs. This area is governed by the Tenant Fees Act which states that certain fees associated with letting a property in the private rental sector are banned. In this article we look at what fees you can charge a tenant and whether a landlord can charge a tenant for legal fees.
Landlord and tenant solicitors
For advice on any aspect of landlord and tenant law and your rights then call the landlord and tenant team at OTS Solicitors on 0203 959 9123 or complete our online enquiry form. Appointments are available through video conferencing, Skype or by telephone appointment.
Why was the Tenant Fees Act implemented?
The government introduced the Tenant Fees Act in June 2019 to protect tenants from handing over a lot of money to landlords before they had secured a tenancy.
What tenancies does the Tenant Fees Act cover?
The Tenant Fees Act applies to assured shorthold tenancies in the private rental sector. The vast majority of rental properties are let on assured shorthold tenancies so most potential tenants are protected by the legislation.
Which fees are banned by The Tenant Fees Act?
The following fees payable to a landlord or letting agent are banned under the Tenant Fees Act:
- A landlord or letting agent can't charge a tenant to view a potential rental property
- A landlord can’t charge for the tenancy set-up costs. These set-up costs include the costs involved with carrying out credit checks against tenants and guarantors and the administration costs of setting up a new tenancy agreement. The only exception to the legislation is if a tenancy agreement was started prior to the 1 June 2019 and the tenancy agreement provides that renewal of tenancy agreement fees should be paid
- At the end of the tenancy agreement a landlord can't charge their tenant for the costs associated with them leaving the rental property unless the tenancy agreement was entered into before the 1 June 2019. That means a tenant can't be charged for the cleaning of the rental property at the end of the tenancy agreement. If a tenant doesn’t leave the property in a reasonable condition then a landlord may be able to recover the costs of a professional deep clean through the tenancy deposit scheme
- If a landlord pays a letting agency to carry out checks on a tenant or to pay for other costs in setting up the tenancy agreement then those costs can't be passed onto the tenant.
What can a landlord charge their tenant for?
Since June 2019, landlords and their letting agents have only been able to charge tenants for the following items:
- Rent - the amount of the rent should be agreed before the tenancy agreement is signed by the landlord and tenant and any monthly rent should be the same amount for each month of the tenancy agreement. If a landlord wants to increase the rent then they need to include a rent review clause in the tenancy agreement
- A holding or a security deposit. However a holding deposit has to be limited to the equivalent of five weeks’ rental payments and once a landlord has taken a holding deposit from a prospective tenant then the landlord can’t continue to advertise the rental property as available to rent. In addition, a holding deposit has to be repaid to the tenant if the landlord doesn’t let the property to the prospective tenant, or if an agreement isn’t reached within fifteen days after the landlord has taken the holding deposit
- For changes to the tenancy agreement although there are limits to these charges. If a tenant requests a change to the tenancy agreement then a landlord can charge up to £50 to make the change. If the costs are higher then the landlord needs to evidence the additional costs incurred
- For the termination of the tenancy agreement prior to the agreed date for the end of the tenancy agreement. The cost of the early termination of the tenancy agreement should be based on the financial loss and reasonable costs incurred by the landlord. Normally the termination fees should not be more than the amount of rent the tenant would have paid if the tenant had remained in the rental property until the end of the tenancy agreement
- Payment of bills such as gas , electricity , water , broadband, TV licence, and Council Tax
- The loss of a key provided that fees for this are contained in the tenancy agreement
- A fee for the late payment of rent provided that late payment provisions are included in the tenancy agreement. Furthermore, the rental payment must be at least fourteen days overdue and the fee for late payment should not amount to more than three per cent of the Bank of England’s annual percentage rate for each day the rental payment is outstanding or costs are incurred by the landlord.
What happens if a landlord doesn’t follow the Tenant Fees Act?
If a landlord fails to comply with the legislation then they can be fined for breaching the Tenant Fees Act. Not following the Act is a civil offence, with a fine payable of up to £5,000.
If a landlord commits another breach of the Act within five years of the first fine the second breach is classed as a criminal offence with the potential for prosecution and a fine of up to £30,000.
For repeat offenders, if a landlord commits two or more financial breaches in a twelve month period or commits a criminal offence they can be placed on a rogue landlord database.
How can OTS Solicitors help?
If you need advice on landlord fees, have questions about your tenancy agreement or need information on any other aspect of landlord and tenant law then it is best to take legal advice from our experienced and approachable landlord and tenant solicitors.
Landlord and tenant solicitors
For advice on any aspect of landlord or tenant law call the landlord and tenant team at OTS Solicitors on 0203 959 9123 or complete our online enquiry form. Appointments are available through video conferencing, Skype or by telephone appointment.