What is it?
It is a new law soon to be introduced by the Government in order to regulate the fees landlords are able to charge their tenants. It is important to note that the law will also apply to those acting on behalf of Landlords eg letting agents.
Which agreements are affected?
The new law will apply to all assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England.
Why was this change in the law considered necessary?
The Citizens advice bureau estimates that tenants on average are asked to pay £400 by way of fees in connection with their tenancy in addition to their deposit and rent in advance, which leaves many struggling financially. It was felt that a change in the law was necessary in order to regulate which fees can be reasonably passed on to tenants in the interest of fairness.
When does it come in to force?
This depends upon when the tenancy agreement was entered into:
All new tenancies created after 1st June 2019 will have to comply with the new law and landlords will not be able to charge the prohibited fees in relation to these tenancies.
If a tenancy agreement was entered into before 1 June 2019, landlords can continue to charge fees written into that agreement until 31 May 2020.
From 1 June 2020, the law will apply to all applicable tenancies and landlords will not be able to charge their tenants the prohibited fees regardless of what is written into the tenancy agreement.
What fees will al landlord be able to charge when the Act is in force?
The following is a list of fees a landlord will be able to charge a tenant:
1) The rent
2) A refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above
3) A refundable holding deposit (to reserve a property) capped at no more than one week’s rent
4) Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
5) Payments associated with early termination of the tenancy, when requested by the tenant
6) Payments in respect of utilities, communication services, TV licence and council tax; and
7) A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement
Any fees not on the above list are prohibited and therefore banned under the provisions of the Act.
What are the penalties for failing to comply with the new law?
In the first instance a breach of the new law will be a civil offence with a financial penalty of up to £5,000,
If a further breach is committed within 5 years of the imposition of a financial penalty or a conviction for a previous breach this will be amount to a criminal offence. The penalty for the criminal offence, which is a banning order offence under the Housing and Planning Act 2016, is an unlimited fine.
Where an offence is committed, local authorities can impose a financial penalty of up to £30,000 as an alternative to prosecution.
A breach of the requirement to repay the holding deposit will be offence and will be subject to a financial penalty of up to £5,000.
For further information, please contact Joanne Hayes, a Partner in the Property Department in Exeter, on 01392 260124 or firstname.lastname@example.org. WBW Solicitors has offices in Newton Abbot, Exeter, Torquay, Paignton, Bovey Tracey, Launceston, Honiton, Exmouth and Sidmouth.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published. For all your legal needs, contact WBW Solicitors today.