What is the new Tenancy Fee Ban and what will it affect?

As well as the changes proposed for the removal of the Section 21 notices there are also more changes that will affect the relationship between tenant and landlord or agent. The Tenant Fee Ban or Tenant Fees Act 2019, will come into force on the 1st June 2019. The ban on fees that a tenant will pay will apply to Assured Short hold Tenancies (ASTs), which are signed by all parties involved from the date of 1st June 2019. If a landlord has an agreement to let to a company and the rent is more than £100,000 a year the Tenant Fee Ban will not apply after the Act comes into force. If a tenancy agreement is changed after the 1st June 2019 and they fall into the category of an AST, then the Tenant Fee Ban will apply.

From the date that the Act comes into force it will be illegal for those letting a property to charge any fees to a tenant that don’t fall under the permitted payments.

These permitted payments include:

  • Rent
  • Utilities, communication services, council tax and TV licence
  • Deposits will now be limited to just five weeks of rent for any tenancy with an annual rent of up to £50,000. If the rent falls between this and £100,000 per annum, the deposit it limited to six weeks of rent
  • Holding deposits will be capped at one weeks rent and can only be held for 15 calendar days unless stated otherwise in writing
  • Fees for changing the terms of the tenancy including tenancy swaps will be capped at £50 including VAT
  • An early termination of tenancy requested by the tenant will result in the tenant having to pay rent until a new tenant is found or until the fixed term or notice period has been reached
  • The tenant can be charged for the actual cost of a lost key or security device, as well as the cost for a locksmith if necessary
  • If the tenant falls into rent arrears of 14 days or more, interest can be charged at a rate 3% over the Bank of England Base Rate, dating back to day one of the arrears

For current tenancy agreements things will come into effect a little differently. If the tenancy is an AST and was signed before the date that the new act comes into force, then the letting agent or landlord will be able to charge fees as they are written in the agreement until 31st May 2020.

If a renewal is signed on or after the 1st June 2019 then the new structure of how fees can be charged will apply. Upon renewing a letting agent or landlord will be required to repay any difference in the deposit to the tenant if they have paid over the new five or six week limits.

If the tenant has an agreement which was signed on or before the new Act date of enforcement and it isn’t set to be renewed before the 31st of May 2020, then the deposit will need to be refunded once it reaches the end of the fixed term and is renewed.

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