Tenant Fees Act 2019: an agent for change?

• United Kingdom

• Real estate
• Real estate sector

23-04-2019

Tenant Fees Act 2019

Coming into force on 1 June 2019, the Tenant Fees Act 2019 (the “Act”) will apply to ASTs, residential licences to occupy and certain student accommodation tenancies in England, with an option being available to extend the regime to Wales. The Act seeks to shake up the landlord/agent/occupier relationship by giving greater protection to residential tenants. 

The Act will introduce a distinction between “Permitted Payments” and “Prohibited Payments”; governing the types of fees landlords and their agents will and will not be able to charge tenants. The former include rent, holding and security deposits, default and termination payments with the latter capturing charges for inventories, credit checks, cleaning services and admin, amongst others. Landlords and their agents will need to navigate these new rules and satisfy the various conditions in order to avoid falling foul of the Act and suffering the consequences.

Whilst the new regime will only apply to new and renewed agreements when it first comes into force on 1 June 2019, from 1 June 2020 it will apply to all agreements, whenever they were entered into. This will have significant implications for landlords and their agents who will find certain charges newly classified as “Prohibited Payments”, and so unenforceable. Although there are relatively few accommodation agreements currently in force which will still be live when 1 June 2020 comes around, the retrospective nature of the reforms will make it necessary for landlords to future-proof their template agreements and business models.

Key points:

• rent is a Permitted Payment but a landlord cannot have a stepped rent (eg the tenant paying a higher amount for the first few months) in order to recover the costs it would otherwise charge
• security deposits are Permitted Payments but there are caps which are tied to the annual rent under the accommodation agreement
• holding deposits can only be as much as one week’s rent and, in the event that the agreement is not entered into within 14 days of the deposit being paid, it must be returned to the person who paid it, unless they agree otherwise
• payments for default are limited to loss of keys and failing to pay rent. There are further rules which must be complied with in relation to these, contained in the Act. Payments for damages for breach are unaffected but must still be compliant with the consumer law framework
• landlords should check their template accommodation contracts to ensure compliance with the Act

For more information contact

• Charlotte Tanikal
• Principal Associate
• +44 113 200 4024
• +44 113 200 4024

• Charlotte Miller
• Senior Associate
• 0113 200 4215
• 0113 200 4215
• Connect with Charlotte Miller on LinkedIn

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