How are your existing tenancies affected by the Tenant Fee Ban?
The Tenant Fees Act becomes law on 1st June 2019 and will apply to all assured shorthold tenancies agreed from this date. But what does this mean for your existing tenancy agreements?
“The law is not retrospective,” noted ARLA CEO David Cox in a Goodlord webinar. This means the ban won’t apply to tenancies that were already in place on 1st June 2019 until they are renewed and become a new fixed term agreement.
Do you need to refund fees for existing tenancies?
Under the Tenant Fees Act, all fees on new assured shorthold tenancies are banned unless they have specifically been made a permitted payment by the law.
You will not need to refund any fees that were charged for tenancy agreements that were already in place before 1st June 2019 - even if the move-in date is on or after 1st June 2019.
You can also keep charging any fees associated with tenancies agreed before 1st June 2019 for the 12-month transition period, as long as these fees were specified in the existing tenancy agreement. The last date of chargeable fees for existing tenancies will be 31st May 2020.
Any tenancies that renew during the transition period will be considered new tenancies, and you won’t be able to continue charging any fees for that tenancy. If you charged check out fees upfront for tenancies agreed before 1st June 2019, you will need to refund these to the tenant within seven calendar days of the tenancy being renewed.
When the transition period ends on 31st May 2020, all fees will be unlawful, regardless of when the tenancy started.
Do you need to refund excess deposits for existing tenancies?
Tenancy deposits will now be capped at five weeks’ rent where the annual rent of the property is less than £50,000 a year, or six weeks’ rent where the annual rent of the property is more than £50,000 a year.
You won’t need to refund tenancy deposits over five or six weeks’ rent that were taken for tenancies agreed before 1st June 2019. You will need to refund the difference when the tenancy is renewed on or after 1st June 2019.
ARLA’s advice for letting agents notes that when deposits have been part-refunded after a renewal, a new Deposit Protection Certificate will also need to be issued.
Still have questions? Check out our Q&A with David Cox on the Tenant Fee Ban for more information on the Tenant Fees Ban. It's important to note that this article isn't exhaustive and doesn't constitute legal advice.