The transition period for the Tenant Fees Act ends on 31 May 2020, which means that from 1 June 2020, all assured shorthold tenancies (ASTs), student accommodation, and licences to occupy housing (including HMOs) in England will be subject to this legislation, regardless of when the tenancy agreement was originally entered into. This means that, from 1 June 2020, any payment term in a tenancy agreement that’s prohibited by the Tenant Fees Act - even one that was entered into before 1st June 2019 - will not be binding.
The only payments you can charge in connection with a tenancy are:
- A refundable tenancy deposit, capped at five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the annual rent is £50,000 or above
- A refundable holding deposit to reserve a property, capped at one week’s rent
- Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
- Payments associated with early termination of the tenancy, when requested by the tenant
- Payments for rent, utilities, communication services, TV licence and
- council tax
- A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement
If you took a tenancy deposit that was in excess of the cap before 1 June 2019, you don’t need to immediately return any amount over the cap, however, you will be required to refund the deposit at the end of the tenancy in the usual way and any new tenancy agreed after this will need to comply with the new tenancy deposit cap.
Otherwise, if you’re charging a fee that isn’t on the list of permitted payments, it is considered a prohibited payment and is outlawed under the ban, regardless of when the tenancy agreement was originally entered into If you accept a prohibited payment and don't return it within 28 days, you will be in breach of the ban. You cannot evict a tenant using section 21 until you have repaid any unlawfully charged fees or returned an unlawfully retained holding deposit.
Every time you make a request for a prohibited payment you are breaching the Tenant Fees Act. A breach of the legislation will usually be a civil offence, with a financial penalty of up to £5,000 per breach, but if a further breach is committed within 5 years of the imposition of a financial penalty or conviction for a previous breach this will be a criminal offence with an unlimited fine.
This article is intended as a guide only. It is not exhaustive and does not constitute legal advice. For more information on the Tenant Fees Act, please refer to gov.uk.