31 Days to go until the Tenant Fees Act 2019 becomes Law
Anticipating change or the next episode of Game of Thrones can be quite traumatic. Since Phillip Hammond’s announcement in his Autumn Statement which feels light years away, there has been a lot of deliberation over what can and cannot be charged , the impact on the Private Rented Sector, the impact on not only SMEs but all agency types and most important of all the impact on tenants.
As the countdown begins there are still many letting agents and private landlords who are not aware of what needs to be done. The focus has been predominantly on the financial elements- loss of income, who will be charged for referencing, administration, inventories, check-ins and so the list goes on.
However, has not registered until very recently has been the “practical “ impact of this change. Therefore it is important that you investigate and plan for the following:-
Are you teams/staff Fee Ban ready? The legislation does not just impact directors/owners/managers- anyone who is customer facing or who may deal with renewals, accounts, administration needs to know exactly what this kind of change means.
Paperwork and documents need to be updated in order to reflect the Fee Ban. This includes but is not limited to Assured Shorthold Tenancies, Licences, Application Form, Holding Deposit Forms, the Schedule of Fees displayed in line with the Consumer Rights Act 2015. Do not forget you will running two sets of paperwork at the same time.
The Security Deposit must be dealt with in accordance with the new Act. Capped at 5 or 6 weeks, depending on whether the annual rent is under over £50,000.00, refunds need to be made if an existing deposit is over the capped amount. Please note that before a refund is made, recalculate the new rent where applicable. Whilst the deposit schemes are advising that new prescribed information does NOT need to re-issued, a belts and braces approach is recommended. A repeat of the Superstrike is not what the industry needs.
The Holding Deposit will be capped at the equivalent to one week’s rent. This will be the only financial commitment from an applicant so be sure that the time frames are clearly understood and that the legal requirements in relation to process are defined in the form signed by tenant and landlord. Please note this will no longer be a “woolly” process - legislation comes into play.
Permitted Payments. Schedule 1 of the Tenant Fees Act 2919 makes it very clear that tenants CAN be charged in certain circumstances BY LAW. There are “capped” payments which can be higher providing evidence can be shown why the payment is higher. It is important to ensure that these “Permitted Payments” are identified on the Schedule of Fees and in the tenancy agreement.
Pets, cleaning, gardening, chimneys are impacted by the new Act. There should be no references to “professional” cleaning of anything and all elements relating to cleaning will be dealt with post check out with deductions made in the usual way from the deposit. Additional monies for Pets are a no no, however, rent in relation to a pet is permitted. An innovative approach from the USA.
The way in which the industry has been bombarded with Legislation over the last last 15 years has been unbelievable, however whilst in some respects legislation can be positive, it is the lack of enforcement that is of concern. With Local Authorities lacking in man power, Trading Standards has a new enforcement arm which will be based in Bristol.
Penalties will have a negative impact on business, so be sure that you clearly understand what the Tenant Fees Act requires your company to do.