Tenants Fee Ban Is Coming Soon – Are You Ready?
Landlords have a lot of regulations to keep up to date with, and it is vital you are aware of forthcoming changes. Landlords should be mindful of the Tenants Fee Ban, from the 1st of June 2019. This ban will affect all new tenancies, and many landlords will find it impacts on their business.
Presently, landlords can charge a range of fees which cover administrative work and crucial tasks. Examples of these fees include renewal fees, inventory fees, check-in fees and vetting fees. However, once the Tenants Fee ban comes into effect, landlords will not be able to charge for these tasks.
Be aware of changes to your business
With many of these roles being vital in the letting process, there have been calls that the ban is unfair on landlords. Even before a lease begins, landlords must vet tenants, undertake an inventory test and prepare the property. Landlords pay a lot of money before they generate any income. With the ban, landlords will be forced to absorb these costs rather than passing fees on to tenants.
There are exemptions where landlords can charge fees, including:
- Where a tenant requests a change in tenancy
- Fees where a tenant has missed a rent payment
- The cost of replacing lost keys
- Utility bills
When a landlord can charge a fee, the charge should represent the work undertaken or the cost imposed on the landlord. When a landlord charges for a fee for a late rent payment, the amount should relate to the loss felt by the landlord. When a landlord charges for a lost fee, the amount should reflect the cost of replacing the key. Landlords are advised to collect and retain receipts to justify these charges.
Holding deposits – New regulations
There will be changes to holding deposits and what landlords can charge. A maximum of one week’s rent will be the new holding deposit cap. When the tenancy doesn’t take place, the landlord is required to return the deposit.
The following stipulations will be in place for holding deposits:
- Landlords will have a maximum of 15 days from accepting the holding deposit to accept a tenant’s application
- When a landlord rejects a tenant’s application, the tenant will receive their deposit within seven days
- If the tenant doesn’t take up the lease or fails to provide requested information, the landlord is not required to return the full deposit
- When the contract starts, the tenant will receive their deposit within seven days of the start of the tenancy or the deposit can be used against the deposit or rent
For security deposits, there will be a cap of five weeks’ rent when the annual rental fee is less than £50,000. There will be a cap of six weeks’ rent when the annual rental fee is £50,000 or more.
Concerning security deposits, there will be a cap of five weeks’ rent for rental property where the annual rental fee is less than £50,000 and for rental dwellings where the annual rental fee is £50,000 or more, there will be a six-week cap on the deposit.
Punishments for landlords who don’t comply
When a landlord charges a fee they are not entitled to charge; the tenant can claim these at the County Court. Trading Standards also have the right to penalise the landlord, and landlords face a fine of up to £5,000 for a first offence.
If a landlord commits a second offence, Trading Standards can impose a fine of up to £30,000. Landlords could face a banning order under Section 14 of the Housing Act 2016.
potential to be banned from acting as a landlord will serve as a deterrent to most landlords.
Letting agents will also face tighter restrictions
Letting agents also face stricter regulations, with these changes coming into effect at the same time as the Tenant Fees Ban.
Letting agents must meet minimum training standards and letting agents should abide by an industry code of conduct. Letting agents must provide evidence they comply with these regulations. Tenants and landlords will benefit from these changes.
Given that June isn’t too far away, landlords must prepare themselves for these changes. There will be financial considerations for some landlords, but landlords will prosper in the long-term, and the removal of rogue landlords will provide tenants with confidence while hopefully creating more opportunities for landlords.
If you’re a landlord requiring assistance in complying with the Tenants Fee Ban or you need help in any aspect of your business, please contact Hunters estate and lettings agents.
Hunters provide a reliable standard of support working in conjunction with Smart Inventory and are on hand to support landlords in Forest Hill, New Cross, Peckham, Dulwich, Brockley and all surrounding towns so contact them if you require assistance.
Hunters South East London – 0203 0024089
Website – Hunters estate agents South East London