What’s the tenant fee ban?Posted by: Pippa John | Post date: 07.06.19
The tenant fee ban bill passed through parliament this February and came into effect on the 1st June 2019.
The bill was designed to ensure that renters are not subject to excessive charges administered by landlords and agents. This bill has been in the pipeline for several years, but as agents we were unsure about which charges would remain and which would not be able to be charged.
The act applies to student lettings, licenses to occupy and assured shorthold tenancies -which are the majority of our tenancies.
Under the terms of the act the landlords, or any agent acting on their behalf, are prohibited to charge for administration items such as referencing, tenancy agreements, inventories, set up fees etc. Also other tenancy charges such as renewal fees and check out fees are also now prohibited.
There are some valid permitted fees, which are detailed below
- Variation of contract – this is to cover the costs associated with taking landlord’s instructions as well as the preparation and execution of new legal documents.
- Lost keys or other security devices – Tenants are liable to replace any lost keys or security devices. If the loss results in the locks needing to be changed – the cost of the locksmith and replacement keys for the tenant, landlord and any other persons requiring keys will be charged to the tenant.
- £50 Change of sharer (tenant’s request) – per replacement tenant. To cover the costs associated with taking landlords instructions, new tenant referencing and Right to Rent checks, deposit registration as well as preparation of new legal documents.
- Early termination (tenant’s request) Should the tenant wish to leave their contract early, they shall be liable for the landlords costs in re-letting the property as well as all rent due under the tenancy until the start of the replacement tenancy. These costs will be no more than the maximum amount of rent outstanding on the tenancy.
There can also be a charge applied for late rent, which will be able to be applied 14 days after the rent de date, at a rate of 3% above the bank base rate.
ARLA Propertymark, our regulating body, spent time closely attending parliament to attempt to ensure the changes are carried were neither at the detriment of tenants or agents, so we have been kept abreast of the changes and potential pitfalls as they went through government.
Here at Lawton and Dawe, we have always tried to remain fair on our fee structure, and have attributed reasonable fees across the board for administration tasks such as referencing and inventories, as these take time and training to complete effectively to ensure both landlords and tenants remain safe during their tenancies.
These fee restrictions apply from new tenancies, so any existing tenancies can have fees applied until the renew to a new tenancy. There will be a rollover period of 12 months, so these fees will also be capped from 31st May 2020.
While the tenant fee ban impacts our business directly, we are taking a positive stance on the situation and our processes and customer service will not change. We will still ensure we are complying with the ever growing legislation in the private rented sector, and will continue to be an agent who is trustworthy and at the forefront of the market, ensuring we can provide high quality rental properties from good and honest landlords. We hope this will wheedle out non-compliant and dishonest agents and landlords.
If you have any questions regarding the tenant fee ban and what fees are permitted, please don’t hesitate to contact us.