The Government Has Killed Tenancy Fees, But What Does This Mean For Landlords?

Back in 2016 Philip Hammond announced there would be a ban on letting agent fees in the Autumn budget. After several revisions it is now coming in to force starting in June 2019 for new tenancies and June 2020 for existing tenancies.

But what does this mean for landlords, letting agents and anyone else who rents out properties they own?

Currently landlords and similar parties are able to charge fees to prospective and current tenants to cover their administration costs for things like credit checks, referencing and tenancy renewal. From June 2019 charging these for a new tenancy will be against the law, and from June 2020 the same will apply to existing tenancies.

What happens if a landlord charges a prohibited fee?

If a breach of this legislation occurs and a payment is taken for a prohibited fee then their tenant will have recourse through the county courts. They will even have to pay interest on the payment, backdated to the day that the payment was made.

The legislation will be enforced by Trading Standards with a fine of up to £5,000 for the first offence. Any further breaches will become criminal offences or can result in fines of up to £30,000.

Eviction Restrictions

One further wrinkle for landlords is that if they request, accept or hold a payment for a prohibited fee then they are unable to evict their tenant using a Section 21 eviction notice.

Landlords are able, under the new legislation, to agree with their tenant that the prohibited fee can be used in lieu of payments owed for rent or deposit. However if a landlord intends to do this then they should keep full written documentation of this agreement that can be produced at a later date should the courts require it.

All landlords should ensure that they carry a full review of any and all fees charged to tenants to ensure that they are compliant with this new legislation before serving a Section 21 eviction notice. Any prohibited fee could cause the notice to be invalidated and make problem tenants much more difficult to remove.

Disclaimer - all information in this article was correct at time of publishing.