The Tenant Fees Act 2019

The Tenant Fees Act (TFA) has made charging certain fees to Tenants AND Lodgers illegal – (s28(1)). The starting point is that the Act essentially prohibits all payments unless it is expressly permitted. For example, landlords now will not be able to charge fees for referencing, check-in, inventory or admin. It is their responsibility to cover the costs. Rather, the only payments you can be asked to make are:

• rent
• a refundable deposit (capped – see below)
• a refundable holding deposit (capped – see below)
• payments to change a tenancy
• payments associated with early termination
• payments for utilities, TV licence, communication services and/or council tax
• a default fee for:
  • The late payment of rent;
  • Replacement of a key and
  • Replacement of a security device.

Rent

Whilst the payment of rent is not a prohibited payment, charging an additional amount for one month is.

For example, if a Landlord charges you £700 for the month in January and £900 for the month of February, the additional amount of £200 will be a prohibited payment.

The Tenancy Deposit

The payment of this IS a permitted payment BUT if the amount exceeds:

• The amount of 5 weeks rent (where the annual rent is less than £50,000); or
• the amount of 6 weeks rent (where the annual rent exceeds £50,000)

Then the amount in excess is a prohibited payment.

Holding Deposit

The payment of a holding deposit is ONLY a permitted payment if it does NOT exceed 1 week’s rent (i.e. the amount of the annual rent divided by 52).

The treatment of the deposit also has to be handled differently. It has to be returned to the tenant or, either put towards the first rental payment or security deposit.

You can only hold onto the holding deposit if the tenant:

• backs out
• does not take reasonable steps to start the tenancy
• fails a right to rent check
• provides misleading information

Landlords can only hold onto this deposit for 15 days UNLESS you’ve agreed another date in writing. If your landlord takes a holding deposit and fails to provide you with an agreement within 15 days, they have to return this to you within 7 days otherwise this will be another breach of the Act.

If a tenant does back out before the deadline for agreement, you have to provide written notice explaining why their holding deposit isn’t being repaid. This must be done within 7 days of the decision not to enter the agreement having been made.

Relevant Default Fees

The default fee can only be charged UP TO an annual percentage rate of 3% above the Bank of England Base Rate – for example, my landlord charged me 6% above the base rate, a clear breach of the TFA.

A landlord can charge this only if there has been a failure to make a payment of rent in full before the end of the period of 14 days from the due date (refer to your agreement).

Changes to a Tenancy

Landlords will still be able to charge for any changes in the tenancy – e.g. permission to keep pets or run a business in the property BUT this is capped at £50.

If the cost is higher, the landlord will have to provide evidence and prove that the charge is reasonable.

Terminating a Tenancy Early

Any charges associated with the early termination of a contract are still lawful, but they cannot exceed the loss incurred by the landlord.

If your landlord agrees to you leaving early, they can ask you to pay their rent as required by the tenancy agreement until a replacement is found. However, if there is a break clause in the agreement and you are validly exercising this, you cannot be charged them for early termination.

Points to Note

A landlord cannot rely on the section 21 eviction procedure until they have repaid any fees they have unlawfully charged and/or returned any unlawfully retained deposits.

The Penalties?

So, what happens if your landlord has charged you a prohibited payment?

You can report any breach to your local trading standards (find yours here) – According to the legislation, the first offence will result in a fine of £5,000. Further offences within 5 years will increase this to £30,000 – or be treated as a criminal offence.

But in reality…it’s unlikely your landlord will be fined. Best case scenario, they’ll get a ‘written warning.’ After months of communicating with the Trading Standards, piles of evidence – including an identical existing contract with another lodger breaching the same laws and a dissolved company still trading – I was told this was the best outcome.