Tenant fee ban – Top tips for Self-Managing Landlords
Following on from our last blog we’ve put together 10 top tips for landlords ahead of the Tenant Fees Act 2019 12-month transition period
1. Remember, existing tenancies will come under the scope of the ban on 1 June 2020
This means that after this date, fees that were originally tied to the tenancy agreement can no longer be charged.
2. Failing referencing isn’t enough to withhold a potential tenant’s Holding Deposit
If a tenant provides completely factually and accurate information but nonetheless still fails referencing landlords still have to return the Holding Deposit. In order to withhold the Holding Deposit for a tenant providing false or misleading information you must be able to prove that the tenant provided factually inaccurate information.
3. Changes to other transparency rules
Under the Tenant Fees Act are still required to be transparent about who you use for Client Money Protection and redress scheme membership. (PLEASE REMEMBER Even Self Managing Landlords need to be a member of these schemes!)
4. Pets don’t have to be a no
Although tenancy deposits cannot exceed five week’s rent this doesn’t mean that having tenants with pets isn’t an option. Provided that it is expressly advertised on property listings and to a potential tenant, a higher amount of rent may be organised.
5. Every fee is illegal unless it is expressly stated as a Permitted Payment
Under the ban, Permitted Payments are: Rent; a capped refundable tenancy deposit; a capped refundable Holding Deposit; default fees; payment on variation, assignment or novation of a tenancy; payment on termination (surrender) of a tenancy; payments in respect of Council Tax; payments for utilities (electricity, gas or other fuel, water or sewage); payments for a television licence; communication services (telephone other than a mobile telephone; the internet; cable television, satellite television); and Green Deal charge. If it isn’t in this list, it can’t be charged.
6. You can’t charge tenants a penalty fee for contractor appointments
Tenants cannot be charged a penalty fee for a contractor call out (but can be charged the actual costs of a call-out), even where it’s due to a fault of their own or when they have not allowed access. Make sure you contract is up to date and includes the correct clauses!
7. Tenancy deposit deductions are not prohibited under the ban
Although tenancy deposits are capped, the legislation does not have any impact on how deposit deductions currently operate. Provided there is a breach of the tenancy agreement, which is covered in the deposit clause, and the landlord or agent suffers a loss as a result, an amount can be deducted.
The amount deducted should be reasonable and reflect the loss incurred by the landlord or agent.
8. Don’t underestimate the severity of charging a Prohibited Payment
Each breach of the ban can result in a civil offence with a financial penalty of up to £5,000. Further breaches of the ban, within five years of the first offence, will be classed as a criminal offence with an unlimited fine.
9. Know what needs to happen with existing tenancy deposits
The cap on tenancy deposits is not retrospective. Existing tenancy deposits that exceed five weeks (or six weeks where rent is over £50,000 per annum) can be held for the duration of the tenancy. Only when the tenancy is renewed on or after 1 June 2019 will the excess deposit need to be refunded.
Where an existing Fixed-Term tenancy entered into before 1 June 2019 becomes a Statutory or Contractual Periodic tenancy, there is no requirement to return any excess tenancy deposit.
10. Don’t get caught out – Stay Complaint!
The regulations are changing quickly and as a self-managing landlord you need to ensure you are up to date with all of the legislation. If you have any queries feel free to get in touch to avoid fines and prosecution!