A ban on charging tenants fees for arranging a private tenancy starts on June 1 across England.
For landlords who need to get up to speed with the new rules, here are the answers to some frequently asked questions:
- 1 When does the ban start?
- 2 Who does the tenant fee ban apply to?
- 3 Which fees are banned?
- 4 Which fees are allowed?
- 5 What happens if tenant fees are collected before June 1?
- 6 What fees can be charged for tenancies granted before 1 June but continue (or start) beyond June 2019?
- 7 What are the penalties for breaking the ban?
- 8 Where can I get more information?
When does the ban start?
For new tenancies that start on or after June 1, 2019.
Who does the tenant fee ban apply to?
Buy to let landlords who rent property in England, including shared houses, are subject to the ban wherever they are based.
Which fees are banned?
The rules relate to any fees charged by the landlord or an agent when a tenancy starts, renews or ends.
Standard letting fees are scrapped, including:
- The cost of adding a guarantor to a tenancy
- The price for carrying out credit checks or taking references
- Inventory charges
- Administration charges, such as the cost of drafting tenancy agreements
In addition to a ban on charging fees, a landlord or agent cannot require the tenant to enter into a third party contract (such as insurance or services).
Which fees are allowed?
Landlords can only charge:
- Holding deposits – limited to the cost of one week’s rent and are also subject to deadlines for refunding money
- Security deposits – set at five week’s rent for annual rentals of less than £50,000 a year, six week’s rent for over £50k
- Rent, but landlords cannot set a higher rent at the start of a tenancy to recoup their costs
- Penalties for breaking the terms of a tenancy agreement, like paying rent late
- Payments in respect of some utilities
- If the tenant specifically requests some variations to the tenancy (including requesting a renewal or wishing to leave early), some limited charges may be made
What happens if tenant fees are collected before June 1?
Any fees paid under existing tenancies remain with the landlord.
What fees can be charged for tenancies granted before 1 June but continue (or start) beyond June 2019?
Where a tenancy has been entered into before 1 June but doesn’t commence until on or after 1 June, any fees paid remain with the landlord or agent and any fees payable under the tenancy remain payable by the tenant until 1 June 2020.
If a tenancy commenced before 1 June, the rules don’t apply until 1 June 2020 after which a landlord or agent must not receive a payment in respect of any clause that would be prohibited had it been made from 1 June 2019 (but all other aspects of the tenancy continue).
If a renewal of an existing tenancy is done on or after 1 June 2019, the rules apply to the new tenancy and only a permitted payment may be requested. If the deposit exceed what’s allowed under the rules, the excess would need to be refunded.
What are the penalties for breaking the ban?
Landlords can face fines of up to £5,000 for breaking the ban for the first time – rising to £30,000 fines and imprisonment for a second offence. It’s also a banning order offence.