Tenant Fees Act Guidance Issued
On the 12th February 2019 the Ministry of Housing announced the date that the Tenant Fees Act 2019 would become law on the 1st June 2019. Whilst drafts of what the Act would include had been published, the guidance was highly anticipated in order for Landlords, Letting Agents, Property Managers and Tenants to be aware of exactly what this new piece of Legislation would include.
The Guidance was published on 1st April 2019 - a joke perhaps on the part of MHCLG. Practitioners would have two months to ensure that they are ready to implement the legislation which will not only affect businesses across England financially, but also require processes and systems to be amended.
A lot of thought has been given to the financial elements of the Tenant Fee Ban, however, the impact is not just on loss of income, the Legislation requires all letting agents and landlords to make quite significant changes in the day to day running of their businesses.
Points to consider:-
The tenant fee ban does not apply existing tenancies. Up until 1st June 2020, unless the tenancy is renewed (new Fixed-Term tenancy), fees that were originally tied to the tenancy agreement can still be charged.
If a tenant wants to Let with a Pet, they can do so providing they pay a higher rent in accordance with any pre-negotiation that may have taken place before the tenancy is executed. If the landlord wants to flatly refuse a pet, s/he are in their rights to do so.
If it’s not in writing then it can’t be charged. Permitted Payments MUST be clear to all applicants on advance of the tenancy beginning. These Permitted Payments include:- Rent; a capped refundable tenancy deposit; a capped refundable Holding Deposit; default fees; payment on variation, assignment or novation of a tenancy; payment for early termination/surrender of a tenancy; payments for Council Tax, utilities, TV licence, communication services.
Be sure to understand how existing deposits have to be dealt with. Existing tenancy deposits that exceed 5 or 6 weeks deposit 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.
Please note that any Fixed-Term tenancy entered into before 1 June 2019 becomes a Statutory or Contractual Periodic tenancy, there is no need to return any excess tenancy deposit.
If tenants miss appointments or refuse access for pre-agreed appointments, a charge cannot be made. Deductions can however be made from the tenants deposit after they vacate if the relevant clauses are present in the tenancy agreement.
The Tenant Fee Ban ONLY applies to Assured Shorthand Tenancies and licences and NOT company lets, High Rent Agreements or Common Law Agreements. Remember this will need to be reflected in your fee schedule as per the Consumer Rights Act 2015 bas amended in the Tenant Fees Act 2019.
Documents MUST reflect the changes, so speak to those supplying your paperwork.
Additional detailed information will be provided through our workshops and newsletters.