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The Tenant Fees Ban: What Does It Mean?

If you are a Landlord or a tenant looking for a new rental property, you may have come across news of the tenant fees ban in England. But what is it and what does it mean?

The tenant fees ban basically means that as of the 1st of June 2019, Landlords and agents in England will no longer be able to charge certain fees to tenants in relation to new tenancies signed on or after this date. These fees can relate to anything that a tenant is required to pay as a condition of the grant, continuance, assignment, termination or renewal of an assured shorthold tenancy or licence agreement.

This includes payments to third parties, either for services throughout the tenancy, for performance of a specific job or for loans from third parties.

An example of such charges would be:

  • Charging for a guarantor form
  • Charges for carrying out credit checks
  • Referencing charges
  • Admin charges

The above list is not exhaustive, but in short Landlords and agents are no longer able to charge tenants fees except for those which the new legislation has declared as exempt. These include:

  • Holding deposits
  • Rent
  • Deposits
  • Charges for defaulting on the contract
  • Charges for changing tenants or allowing tenants to vacate the property early

Whilst these are all exempt from the banned list, these charges are subject to additional restrictions as part of the legislation.

The ban will apply to both individual Landlords managing their own properties and to agents and will apply to all tenancies signed on or after the 1st of June 2019, including renewal tenancies. Currently it will not apply to pre-existing tenancies, however after one year the tenant fees ban will attach to pre-existing tenancies and any clauses that charge fees within those tenancies will become ineffective.

The tenant fees ban is quite a complicated issue, so what impact will it have?

Whilst it will reduce the initial cost for tenants in securing a rental property, it will place a responsibility on Landlords, property owners and agents to absorb some of the administration costs associated with creating new tenancies.

On top of this, the finer detail of what is and is not allowed to be charged to tenants is a potential mine field for independent Landlords who opt to rent out their properties without the help of an agent.

Whilst we have only given a brief over view of the changes in this blog, it is vital to remember that there are a number of restrictions relating to rent, holding deposits, deposits, breaches of tenancy (including damage and default payments) and changes to tenancies that MUST be adhered to by all Landlords and agents.

The financial penalties for being in breach of these could result in a first offence fine of up to £5,000, with subsequent fines of up to £30,000 and the possibility of a banning order. To find out more about the restrictions, you can click here.

If you are currently a tenant or are looking for a new rental property, you can find advice and guidance about the Tenant Fees Act 2019 by clicking here.

 

At Hannells, we are well prepared for the changes to tenant fees. We no longer charge administration fees to our tenants.

If you need support or advice on the Tenants Fees Act or need help finding a tenant or managing your rental property, just give us a call on 01332 294 396 and one of our expert team members will be happy to help.

Alternatively, click here and book your free consultation.

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