You may be breaking the law without knowing if you rely on a template tenancy agreement you have stored on a computer for several years.
Once landlords could change the date, names, and addresses and print a tenancy agreement without worrying about the consequences
But the law has changed rapidly in recent years, and what were accepted terms and conditions not too long ago are now illegal and could land you in trouble.
Not only do landlords have to contend with a tenant fee ban, but they also have to write tenancy agreements in a way that doesn’t include unfair terms and conditions.
If you have an old tenancy document, here are some clauses you need to look out for to ensure your contracts are still legal.
- 1 Banned Tenancy Agreement Clauses
- 2 The Fees Landlords Can Charge
- 3 Updating Your Tenancy Agreement For Free
- 4 Does Your Tenancy Agreement Break The Law? FAQ
- 5 More information
Banned Tenancy Agreement Clauses
One way to check your tenancy agreement is to let a solicitor experienced in property law give the document a once over.
Lawyers should have up-to-the-minute knowledge of what you can and can’t demand from a tenant.
Here are some of the common clauses forbidden by the tenant fee ban.
Guild subscribers can use the Tenancy Builder, which is regularly updated and kept up to date.
Demanding too much deposit
New laws in England restrict the security deposit to the equivalent of no more than five weeks’ rent.
The big catch for landlords is the rule may be retrospective for renewals. If you took a deposit of two months’ rent in 2017 and are renewing the tenancy now, you should refund the difference between the deposit you took and the current total of five months’ rent.
TIP: Check your tenancy agreements do not fall foul of this change in the law, and refund any excess deposits to avoid a potential fine.
Late rent penalties
Many older tenancy agreements include a penalty if the tenant pays the rent late. The clause would say that the tenant should pay £5 a day extra if the rent remains unpaid.
Under the Tenant Fees Act, landlords can charge for late payment when the payment is two weeks late at an interest rate of the Bank of England base rate plus 3 per cent.
The calculation is a little complicated, so here’s an example:
A tenant is 40 days late with an £850 a month rent payment. The base rate is 0.1 per cent, making the rate you can apply 3.1 per cent a year (0.1 + 3 per cent).
The interest due yearly is £850 x 3.1 per cent = £26.35
Pro rata for 40 days, the interest is £26.35 x 40/365 = £2.88
By the way, landlords cannot charge for sending the arrears warning to a tenant.
Renewing a tenancy
Charging the tenant to renew a tenancy is forbidden under the new rules, so make sure you remove the clause from any contract.
We recommend where possible leaving the tenancy to continue as a periodic tenancy because renewing can unnecessarily trigger new regulations since it was last created.
Taken to the cleaners
When a tenant moves out, the state of a home is often the cause of friction between landlords and renters.
Historically, landlords demanded tenants should bring in a professional cleaner when they hand back the property. However, the fee is no longer legal, so remove the clause from your tenancy agreement.
For the avoidance of doubt, if a tenant doesn’t clean a property when they leave and assuming there is a term requiring it to be clean, a charge can be made for cleaning. It’s the default requiring a “professional” cleaner regardless of cleanliness, which is prohibited.
You can try to get this claim past a deposit protection adjudicator, but the reality is you will need a detailed inventory signed by the tenant when they moved in to make any progress. Even then, you will have to argue that any defect goes beyond fair wear and tear.
The Fees Landlords Can Charge
The Tenant Fees Act limits the charges a landlord can make to a tenant.
Besides a holding deposit and security deposit, only three fees are allowed:
- Late rent charges.
- A reasonable charge for replacing lost keys. The bill should match the amount on the invoice from the locksmith.
- For England, a charge of no more than £50 for changing the terms of the tenancy agreement at the request of the tenant, for example, adding a new tenant or giving permission for keeping a pet.
Updating Your Tenancy Agreement For Free
We would, of course, mention our Tenancy Builder which always has the latest version of all our agreements, including assured shorthold tenancy. For more information and all the types of agreements, see the help docs here.
Downloading a free template from one of the many websites offering the service is not generally a good idea.
These are loss-leaders designed to lure landlords into buying advice or other documents, and are often months or years out-of-date.
However, the government publishes a regularly updated free model tenancy agreement for landlords.
The tenancy agreement is not perfect, as the drafters had longer-term tenancies of more than two years in mind. The contract also includes a clause that allows pets by default.
But the contract is a starting point – especially as the page is updated as landlord tenant law changes.
Does Your Tenancy Agreement Break The Law? FAQ
What is the tenant fees ban?
The ban comes from the Tenant Fees Act, which stopped landlords and letting agents from charging fees and capped deposits tenants pay for new tenancies in England. Scotland and Wales have their own rules.
Can landlords charge for credit and reference checks?
No. The Tenant fees ban stops landlords from charging for credit and references checks. Landlords can still carry out the checks, but at their cost.
What if the landlord and tenant agree to terms that break the law?
They can’t make a side agreement that breaks the Tenant Fees Act or consumer protection laws.
An unfair clause balances the terms in favour of the landlord to the detriment of the tenant.
Even if the tenant agrees to the clause, it’s doubtful the landlord could enforce the terms.
Examples include banning pets entirely without a reasonable consent provision (e.g., for goldfish or similar), limiting the tenant’s rights to quit the property or demanding prohibited fees.
What’s the difference between a security and a holding deposit?
A security deposit is handed to the landlord and placed in deposit protection for the duration of the tenancy as cover for damage or rent arrears.
A holding deposit is a refundable amount paid before the tenancy starts to reserve a home.
What are the two security deposit rules?
The refundable security deposit has two caps (England only):
- For rents totalling less than £50,000 a year, the cap is five weeks’ rent.
- For rents over £50,000 a year, the maximum deposit is six weeks’ rent.