There is concern that many agents will go bankrupt without the tenant fees and so they are bringing in the requirement for agents to have Client Money Protection in April, before the fee ban. The enforcement authority can also recover the amounts unlawfully paid and charge interest on them too. (c)some of the payment or deposit has been applied as mentioned in paragraph (a) and the rest has been applied as mentioned in paragraph (b). There are currently no additional references that you need to check. On 1 June 2019 the ban on tenant fees came into force in England. this could soil the carpets and infest the carpets with fleas. I1S. The new Tenant Fees Act is in force in England as from 1st June 2019. Again, this does not have to happen immediately, you will have 12 months grace. From 1st June, all tenant payments will be banned by default unless the Act … For example, in discussion with a landlord recently he said “I won’t be affected as I don’t charge my tenants any fees, they just pay for the referencing”. If you want an agent to deal with me to shortcut the work for your lazy ass YOU pay for it. (3)No section 21 notice may be given in relation to the tenancy so long as all or part of the prohibited payment or holding deposit has not been repaid to the relevant person. Subsection (3) allows for a ‘get out of jail card’ in the form of a refund of the prohibited payment or holding deposit and then the section 21 notice becomes available again. Lost keys or access devices (electronic fobs) can be charged, but only at the actual cost, which must be reasonable. Another glaring omission from the early drafts was the ability to require the tenant to pay the utilities. This comes under the heading of default as the deduction would be in respect of a breach of tenancy. This post was last updated on February 25th, 2020 at 01:10 pm. A second or subsequent offence within five years may attract the financial penalty (up to £30,000), kept by the local authority, or may be pursued through the courts where an unlimited fine may be issued, along with it being a banning order offence. Lawyers carrying out legal work are also exempted. Form 6A (the prescribed form for section 21 notices) has been amended to take account of the provisions of the Tenant Fees Act 2019. You raise a very good point and let me see if I can help explain this in more detail. Great! These are defined as electricity, gas, or other fuel and water or sewerage. The Tenant Fees Act, introduced by the Government in 2019, bans most letting fees in the private rented sector. In simple terms this means if the landlord and tenant have not started the tenancy within 15 days then, by the default, the holding deposit will have to be refunded. Section 17 of the Act sets out the restrictions on giving a s.21 notice. If it is not spent on this it has to be returned to the Treasury so there could be some enthusiasm for enforcement rather than lose the money! At the centre of the new laws is a ban on tenant fees, including admin and agency fees. Agents will be tempted to do this to raise money but should consider what might be in the landlord’s best interest as is their fiduciary duty. The person who receives the holding deposit must repay it if: the person believes one of the above reasons exist but they do NOT give the person who paid the deposit a notice in writing, within 7 days, explaining why the holding deposit will not be repaid. In some case the amount they offer exceeds the limit of the 5 weeks’ rent the legislation imposes. Landlords will not be permitted to evict tenants from a property under the Section 21 procedure until they have refunded any deposit money or unlawful fees charged to the tenant/s. This date is our basedate. For clarity, this does NOT affect any tenancies which continue on a periodic basis. This guidance covers the Tenant Fees Act 2019, changes to Section 83 and 87 of the Consumer Rights Act 2015, changes to Section 85 of the Enterprise and Regulatory Reform Act 2013, Article 7 of the … No changes have been applied to the text. So, for example, if you included a clause with an inventory check out fee, it is an offence for which you could receive a penalty, and you could not charge the penalty as the provision is not enforceable, but it would not give the tenant the right to walk away from the whole tenancy or to refuse to pay the rent. It also clarifies that requiring a Green Deal payment as part of the utility bill is a permitted payment. the deposit relates to an assured shorthold tenancy. Whilst this seem logical and obvious, the statement in the legislation is clearly linked to paying the council tax to the “billing authority” as defined in the Local Government Finance Act 1992 section 1(2). You’re nearly there. It is significant to notice that it is not sufficient in section 17(1) simply to demand the payment, payment must actually be made. In addition to this simple restriction other restrictions prevent the requirement to enter into a contract for services or insurance. Use this menu to access essential accompanying documents and information for this legislation item. Landlords will not be able to charge for referencing. Remember that the law starts from the position that no money may be taken from the tenant unless the law states it can. Chargeable by the landlord or agent it is limited to the greater of £50 or the reasonable costs. T he Tenant Fees Act 2019 (“the Act”) introduces fundamental and extensive changes to the fees which landlords or letting agents can seek to recover from the tenant of an Assured Shorthold Tenancy (“AST”) in England since 1 June 2019. Rent default can only be charge at 3% over Bank of England Base rate, and regardless of the rate actually incurred by the landlord. Offences. A holding deposit does not have to be repaid where, with the consent of the person who paid the money (note not necessarily the tenant), it is used as part of the rent or deposit. Great! The first date in the timeline will usually be the earliest date when the provision came into force. There are exceptions to this general rule requiring repayment. Schedule one lists permitted payments after the Tenant Fees Bill is in place, though many of them have restrictions. 2 . In other words it counts as if they had got a county court judgement and the usual enforcement options apply. This article gives an overview but further detail can be found in the act itself. Section 1 introduced the ban for landlords and section 2 introduces the ban for agents. It would be quite easy with the tenant as on the tenant application form the tenant could simply agree that the holding deposit could be used as rent or as the main tenancy deposit. Local Trading Standards, and district councils, have a role enforcing the Tenant Fees Bill. some of the remaining part has been applied as mentioned in paragraph (a) and the rest has been applied as mentioned in paragraph (b). Where a prohibited payment is charged the law says that that provision of the tenancy is not binding but the rest of the agreement remains binding. Duty to publicise fees … This extra amount is a prohibited payment. Section 34 explains that the actual ban on fees needs regulations to commence them. Tenant Fees Act 2019 CHAPTER 4 CONTENTS Prohibitions etc applying to landlords and letting agents 1 Prohibitions applying to landlords 2 Prohibitions applying to letting agents 3 Prohibited and permitted payments 4 Effect of a breach of section … Subsection (3) does not apply where none of the prohibited payment or holding deposit has been repaid to the relevant person if, with the consent of the relevant person—. If you have a resident landlord who rents out rooms in his own house to lodgers, he will be only issuing a licence and therefore cannot charge any fees. The second permitted payment is the deposit, the restriction here is that it must not exceed five weeks’ rent on a tenancy with a rent value of up to £50,000 per annum, six weeks rent over that level. To understand whether or not the text of this legislation is up to date, please check those references in the following pieces of legislation. The following results are legislation items with 'EU Exit' in their title that directly reference and therefore may change this item of legislation. The TFA 2019 also prevents a landlord from proceeding with the eviction of a tenant on “no-fault” grounds, using section 21 of the Housing Act 1988, until all unlawfully charged fees or retained holding deposits have been repaid to the tenant. Another helpful comment in the draft guidance is that if a set-up fee is charged and stated to cover the agreement, referencing, inventory, right to rent checks and check in costs, this would amount to five separate offences, each carrying a £5,000 penalty, not a single offence. This paragraph deals with a payment where the tenant wants a variation, assignment or novation of the tenancy. Monies paid to the agent without the landlord’s express agreement would be money that actually belonged to the landlord. some of the payment or deposit has been applied as mentioned in paragraph (a) and the rest has been applied as mentioned in paragraph (b). The Deposit Protection Scheme (DPS) offer a facility to calculate the amount of deposit that should be returned to a tenant if the initial deposit was over 5 weeks. This section has no associated Explanatory Notes, a landlord breaches section 1(1) by requiring a relevant person to make a prohibited payment in connection with an assured shorthold tenancy, and. The new Tenant Fee Ban legislation, over two years in the gestation, has finally received Royal Assent with the majority coming into force on the 1 June 2019. TENANT FEES ACT 2019 EXPLANATORY NOTES What these notes do These Explanatory Notes relate to the Tenant Fees Act 2019 (c. 4) which received Royal Assent on 12 February 2019. Requiring the tenant to pay the council tax is a permitted payment. Remember, you can unsubscribe at any time. 17. The Tenant Fees Act 2019 (Act) has recently been enacted and is due to come into full force on 1 June 2019. This introduces an interesting situation where the agent may charge the landlord for a new tenancy and the landlord may be able to charge at least a pro rata amount of that to the tenant as a loss. Copyright © LettingaProperty.com all rights reserved. 16. Finally, we advise on the impact TFA will have on landlords. The Act applies to tenancies of housing in England. There are certain markets where this simply would not work, student lets for example, where there may be six months between reservation and move in. Join over 20,000 private landlords who receive our weekly newsletter. As a tenant, it’s not my responsibility if Landlord likes to use agents. Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. The Tenant Fees Act 2019 ("the Act") will introduce fundamental and extensive changes to the fees which landlords or letting agents can seek to recover from the tenant of an Assured … COVID-19 information for our landlords and tenants. Firstly, we provide the main changes that have been brought in by TFA. Assistance to recover amount paid. Section 27 contains the definition of what is meant by a “letting agent”. 18. The Tenant Fees Act 2019 has changed the law about fees people can be asked to pay when seeking privately rented accommodation in England. Whilst some examples would be easy to identify as a problem, one tricky area is deposits. It should, however, be noted that you cannot choose to use a contractual tenancy. Therefore the tenancy agreement can include a requirement for the tenant to purchase a TV licence if they want to use a TV. (4)Subsection (3) does not apply where none of the prohibited payment or holding deposit has been repaid to the relevant person if, with the consent of the relevant person—. The TFA provides new restrictions on what payments and deposits a landlord can impose on tenants. Tenant Fees Act 2019: Guidance for landlords and agents . Recovery by relevant person of amount paid. The duties of the lead enforcement authority are stated in section 25. These payments can very clearly be charges from the landlord to the tenant, though the charges made by the landlord cannot exceed the reasonable costs incurred by the landlord in providing the service (law that already applies to the provision of electricity and gas). Schedule 2 basically governs the rules around holding deposits (not the amount but rather when they have to be refunded etc, the procedure). To show how comprehensive this ban is, the first item that the schedule allows you to collect is the rent! Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. ABOUT THE BAN . It starts with a notice of intent from the enforcement authority. Here's everything you need to know! The aim of the Act is to reduce the costs that tenants can face at the outset, and throughout, a tenancy. Subsections 30(5) (for landlords) says that 12 months after the law comes into force any provision in the agreement “ceases to be binding” if it would be a prohibited payment in an agreement created after the law came into force. Thirdly, before the deadline for agreement the tenant notifies the landlord or agent that they have decided not to enter into the tenancy. The agent took an administration fee together with an addition sum for carpet cleaning due to the premises being occupied with a family having an an animal. Enforcement authorities can use the money recovered to spend on any private rented sector enforcement. One very obvious casualty of this will be a requirement for the tenant to pay for professional cleaning of the property. 2019/857, reg. This may affect landlords holding properties within a limited company structure. Moreover, landlords who take banned fees from tenants and do not pay them back are restricted from issuing section 21 eviction notices on the tenants. In addition, the Act restricts a landlord’s ability to serve a valid notice under section 21 of the Housing Act … This is a welcome new protection for private renters — Citizens Advice has been calling for these changes for a decade . 12. Dependent on the legislation item being viewed this may include: This timeline shows the different points in time where a change occurred. Section 17(2) links the section 21 penalty to failure to comply with Schedule 2. This is a sweeping change which landlords and agents must make themselves aware of quickly… ... All other rules around the application of the section … Also, if new tenancy agreements are entered into (signed) before 1 June 2019, these tenancies will not be affected initially, irrespective of when the tenant actually moves into the property, though the cap will apply to any future renewal. The TV licence is dealt with separately above, and in addition to this it is permitted to require tenants to pay for subscriptions for telephone services, other than mobile phone, broadband, cable and satellite services. Added … Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts. The ban on a section 21 notice does not apply where none or part of the prohibited payment has been refunded because, with the consent of the relevant person, it has been used towards the rent or the main tenancy deposit, or split between the two. We suggest a pro rata amount as if the tenant left in month 11 of a 12 month fixed term it would not seem reasonable to charge all the re-letting cost to the tenant when the landlord had enjoyed eleven twelfths of the benefit and had only lost one twelfth of what they paid for. As the fee has already been been drafted into the tenancy agreement, prior to the 1st June 2019 it will still be chargeable and allowed for a period of up to 12 months (until 1st June 2020). They are stated to include providing information, to issue guidance, to oversee lettings legislation and provide guidance to local authorities in enforcing the legislation. Thereafter, collecting the check-out fee would be a prohibited payment. This provides the details of how the penalty regime will be applied. … The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. Changes to tenancy deposits As part of the Tenant Fees Act 2019, the amount of tenancy deposit that a landlord or agent can request will be capped and dependent on the total annual rent for the property. The Tenant Fee Ban will be extended to all existing tenancies as of June 2020. However this can only be for default in relation to keys and rent. However, para 2(2) allows for the landlord and tenant to agree, in writing, a deadline for agreement that is different from the default. My only issue is that we would not move in until June 8th at the earliest so it is only then that we would enter the tenancy agreement. How about if I want to use another agent service to deal with your agent and charge you for it as well?? Subsection (3) does not apply where part of the prohibited payment or holding deposit has been repaid to the relevant person if, with the consent of the relevant person—. The guidance clarifies that if a landlord has ten properties with too much deposit, then each deposit is an offence, but as they are all committed at the same time, they would ‘only’ be up to £5,000 per property. People working in those roles within their employment are not counted, so the responsibility lies at the company level. The law creates a penalty of £5,000 for the first offence and £30,000 for a second offence within five years. the relevant person makes a prohibited payment to the landlord as a result of the requirement being made. If the tenant wants a pet in a block and the freeholder imposes a charge for agreement to have the pet then, within limits on reasonability, that cost can be passed on to the tenant. This is understood to allow for charges at the end of the tenancy where the tenant has caused damage to the property and the landlord seeks a deposit deduction. Although the focus is on agents, be aware that this affects private landlords too. It won’t save tenants money, it will just change how tenants are billed for services. The latter drafts of the legislation clarified that guarantors cannot be charged either. There are no limits on the agreement in terms of how long it could be. Summary of Tenant Fees Act 2019. 14. If you are wanting to secure the property, I would recommend you process a payment before someone else. Remember, you can unsubscribe at any time. So for example the tenant being invited to pay for their referencing or provide a list of documents to comply with referencing at no cost, should meet the new requirements. Whilst the view is understandable, it is misguided and charging for referencing could be an offence with a £5,000 penalty. 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