This piece of legislation has caused ripples through the residential property lettings sector in terms of trying to deal with the fair way that landlords and managing agents can pass on various types of payments to residential tenants.
Here’s a quick broad-brush summary of the three main types of changes that this has made:
1. Removed Fees
This is the hot topic, with landlords and agents no longer being allowed to pass on letting and administration fees to tenants.
It isn’t retrospective, but does apply to all tenancies both existing and new from 1st June 2020.
Even if a lease says a landlord can charge say a renewal fee, this legislation overrides this and prevents.
It also applies to wider licences to occupy within the residential market, for example guardian schemes.
The only exceptions to this are certain “permitted payments”.
2. Reduced Deposits
Deposits paid by tenants are changed in two ways.
Firstly, the usual retained deposit kept in an authorised retention scheme throughout the tenancy; now reduced from six to five weeks’ worth of rent.
Secondly, a holding deposit paid at the beginning whilst a tenancy completes. Now only one weeks’ worth of rent, with certain conditions for a landlord to keep, such as the tenant aborts, and time frames like 15 days to agree the lease and up to 14 days to repay afterwards, and not going towards rent and the main deposit.
3. Restricted Payments
There are more restricted forms of payments that a landlord can raise to a tenant for whatever changes and happenings during the lease.
Genuine cases are stated like lost keys, late payments over 14 days at a set interest rate, and recharging say utilities and Council tax.
Sensible caps on these are stated as, for example up to £50 for a variation or assignment of the lease.
Fairly Paying Up
The gist of the new Tenant Fees Act 2019 is clear – to only pass on fair charges to residential tenants. The above three main ways in which this is being accomplished helps provide a general property management overview, with further details available online of course.
Although maybe fair in principle for tenants, there will be knock-on effects to consider with landlords and managing agents who still need to spend genuine time and effort somewhere in managing the property interests – I guess time will only tell how this pans out.