As of the 1st of June 2019, the Tenant Fees Bill will be in force and a wide range of tenant fees will be illegal in England. This change has come about to make renting more affordable to tenants. According to Government figures, an estimated £240m each year will be saved by tenants after the removal of these fees.
While there are positivity surrounding tenant groups regarding this change, there are some concerns as to how the Bill impacts on landlords. Many of the fees imposed by landlords relate to essential stages in the letting process, and landlords will still have to carry out this work. Therefore, landlords will have to absorb these costs to maintain the standard of service provided to tenants.
Landlords must be aware of where and when they can charge fees
When the new Act comes into force, landlords will only be able to charge their tenants for:
· The rental fee
· A refundable holding deposit, with a cap of one weeks’ rent
· A refundable tenancy deposit, with a cap of five or six weeks’ rent, depending on the annual rental fee
· A charge for early termination of a tenancy or change in tenancy – limited to £50 or the actual cost incurred
· Council tax and utility bills, if applicable
· The cost of replacing lost keys or other areas where the landlord incurs a cost due to a default or error by the tenant
Landlords are not permitted to charge for third-party work, such as professional cleaning services, which are classed as exempt under the new Act. However, if damage caused by the tenant leads to the landlord paying a professional for work, the landlord is entitled to retain some of the tenant’s deposit to pay for the work.
There are severe penalties for landlords who charge illegal fees
Landlords who charge a fee they are unable to will have 28 days to repay the money. If the landlord fails to repay this money, they may face a financial penalty up to £5,000. If the landlord commits a similar offence within five years, they may face criminal prosecution, with the threat of a fine up to £30,000.
If there is outstanding money owed to the tenant, the landlord will not be able to repossess their property until repayment occurs.
Breach the rules, as enforced by Trading Standards, and there’ll be a financial penalty of up to £5,000 to pay. Do so again within five years, and you could face criminal prosecution or be forced to pay up to £30,000. Landlords will also be unable to repossess their property until any illegally charged fees are repaid to the tenant.
With the Act coming into force in June of 2019, it will be relevant by the new academic year. Therefore, landlords letting to students in Coventry should be aware the Act will impact on their letting activities, particularly in comparison to fees they charged at the beginning of the 2018/19 term.
If you let to Coventry students and need guidance on how to deal with the new Act, contact Studentcircle Lettings, and we will be more than happy to assist you.