I needed some urgent advice about an auction property, and the solicitor that dealt with me was brilliant: professional, clear and quick. This is because the Tenant Fees Act 2019 is now in force.. Highly recommended, professional service and expertise, Jacob Tidy was very helpful in resolving a recent enquiry. a utility to the tenant (electricity, gas, other fuel, water or sewerage, Green Deal plan) or. If requesting payment under this heading, the actual receipt for the new key, security fob or whatever was reasonably incurred must be provided and that would be all that can be charged. We have discussed earlier that for an existing tenancy (entered into before 1 June 2019), any term that requires a prohibited payment after 1 June 2020 ceases to be binding and any prohibited payment received must be repaid within 28 days. A “final notice” must then be given to the person by the authority requiring the penalty to be paid within a period specified in the notice (between 7 and 28 days depending on the nature of the breach). You could increase the rent to reflect the cost but no mention of any split could be made so as to ensure all they are paying is “rent”. Prohibition on Requiring A Tenant to Enter Into A Third Party Contract The Act bans landlords and agents from charging fees to tenants other than those expressly permitted by the Act. There appears to be no reason why a landlord or agent cannot receive payment directly for a utility. Filed Under: Residential Property Tagged With: Landlord, Leases, Rental Property, Residential Property, Tenant. Similarly, any term requiring the tenant to use a specific inventory clerk for check out or check in is prohibited (in any event, the charging for an inventory is prohibited). As stated at the outset, it’s essential to understand that effectively ALL payments in connection with a tenancy of housing in England are prohibited unless they are specifically permitted under the Act. It’s nice to see this legislation being fairer in this regard. BHW were recommended to us via the developer we were purchasing a property from and we're so glad we decided to use them. Also, The Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) the payment or deposit being applied towards a payment of rent under the tenancy, the payment or deposit being applied towards the tenancy deposit in respect of the tenancy, or. Thank you very much to Elle, Waheeda and the rest of the team! The ban on tenant fees came into force on 1 June 2019 and … Our small claims guidance is available here. In addition to the rent itself, payment of interest is a permitted payment as long as the amount of interest charged is: Therefore a daily rate may be calculated and can be added from day 15 of non-payment onwards (but the interest can then be applied back to the day after the ‘due date’). a telephone other than a mobile telephone; a contract for the provision of a service, or. Does that need repaying within 28 days from 1 June 2020? Where a tenancy was granted before 1 June 2019, if any provision of the tenancy would be prohibited (had the tenancy been granted from 1 June 2019), the provision ceases to be binding on the tenant (or a relevant person) after 1 year from commencement of section 1 of the Act (but the agreement continues, so far as practicable, to have effect in every other respect). If you ask yourself, whether a charge to a tenant is prohibited, you’re asking the wrong question. The Tenant Fees Act 2019 (the Act) recently came in to force. Under the Tenant Fees Act, Tenancy Deposits will be capped at five weeks’ rent where the annual rent is less than £50,000 and six weeks’ rent where the annual rent is £50,000 or more. The starting point to understand is that ALL payments are essentially prohibited unless the payment is expressly “permitted” under the Act. A person who receives a notice of intent may, within 28 days, make written representations to the authority. The holding deposit must be repaid by the person who received it if: If the landlord and tenant enter into a tenancy agreement (not just agree to do so at some future date), the holding deposit doesn’t have to be repaid to the tenant if the payer consents for the holding deposit to be applied towards the first payment of rent under the tenancy or towards the payment of a tenancy deposit in respect of the tenancy. This allows for damages such as repairs to be claimed at the end of a tenancy for example. But, the pressures of getting everything done and signed within 14 days could be tricky (but that can be extended by agreement). As such, the agent may be right that anything beyond the granting of the tenancy follows the rest of the rules and not the holding deposit rules. In this example, the interest can be applied back to 2 August (but only if payment hasn’t been made before 15 August). Crucially, the tenant can’t make this request until 10 days have elapsed. There is no requirement for this repayment to be requested by the tenant (or other relevant person) so this is a strict time-limit and the landlord or agent must be proactive in returning the money. If a landlord requires a relevant person who has an assured shorthold tenancy to make a prohibited payment and, the person makes a prohibited payment as a result of the requirement or, a landlord breaches the holding deposit rules where the holding deposit relates to an assured shorthold tenancy, no section 21 notice may be given in relation to the tenancy so long as all or part of the prohibited payment or holding deposit has not been repaid to the relevant person. the landlord and tenant enter into a tenancy agreement. This website uses cookies to improve your experience. the landlord and the tenant fails to enter into a tenancy agreement relating to the housing before the deadline for agreement and in this case it must be repaid within 7 days from the deadline for agreement date. It’s not only an offence for a landlord or letting agent to require a prohibited payment but it’s also an offence for a landlord or letting agent to require a relevant person to make a prohibited payment to a third party (for example asking a tenant to pay directly to a referencing company is prohibited). We had one issue with the sale of our property and we were offered more than one option to resolve this and also time to try and resolve this ourselves. Therefore, in our example, 1 September (£800) is higher than a later period. The Tenant Fees Act 2019 bans private landlords and letting agents from charging a ‘relevant person’ any fee unless it is a ‘permitted payment’. Regulations 2019 are amended (which commence from 1 April 2019). If the written notice is not given within 7 days, the holding deposit must be repaid regardless. New legislation has been introduced for residential tenants to restrict the type and amount of payments that landlords and letting agents can require from tenants of most assured shorthold tenancies, student accommodation and under licences to occupy. Assured Shorthold Tenancies (ASTs), other than social housing tenancies or a lease of over 21 years; Licences to occupy housing – for example a lodger or House in Multiple Occupation (excluding holiday lets, social housing and live in carers where a charity/ community interest company has given advice to either the licensor or carer). Only when the landlord requests and receives a prohibited payment do the restrictions on serving a section 21 apply. I would certainly recommend them to anyone with employment issues. due to false information resulting in a tenancy not being granted) the landlord or agent can then take a further holding deposit from another prospective tenant. The same goes the other way round (so if an agent has already requested and then the landlord subsequently requests an interest payment, the landlord has requested a prohibited payment). make a loan to any person in connection with a tenancy of housing in England. The tenant then pulled out for no apparent reason. The re-sale of gas and electricity is already governed by legislation (it can only be re-sold for the same price it cost). The Act also contains detailed obligations relating to holding deposits. Furthermore, a second offence is a banning order offence. The Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018 are amended and the changes which aren’t really necessary for this article can be seen here. Essentially all charges are prohibited. Although receiving rent is a permitted payment, it is subject to the following: if the amount of rent payable in respect of any relevant period (“P1”) is more than the amount of rent payable in respect of any later relevant period (“P2”), the additional amount payable in respect of P1 is a prohibited payment. If in doubt, it will probably be easier to just repay the holding deposit and move on! a requirement imposed by or pursuant to a tenancy agreement entered into before 1 June 2019. a requirement imposed by or pursuant to an agreement between a letting agent and a relevant person entered into before 1 June 2019. make a prohibited payment to the landlord or an agent in connection with a tenancy of housing in England, make a prohibited payment to a third party in connection with a tenancy of housing in England, enter into a contract with a third party in connection with a tenancy of housing in England if that contract is a contract for the provision of a service, or insurance (except utilities or communication services, see later), or. Where rules are different for landlords or agents we will try to expressly distinguish. where the landlord takes all reasonable steps to enter the tenancy agreement by the deadline for agreement but the tenant fails to do so and neither the landlord or letting agent have breached their obligations under the Act nor behaved in a manner that would make it unreasonable to expect the tenant to enter into a tenancy agreement with the landlord. Only the landlord OR agent can request the interest payment. BHW provided a prompt and courteous service explaining complex statements in layman's terms. This isn’t a fixed locked period but it means after 10 days, the tenant can apply to a scheme to recover the deposit if the landlord hasn’t repaid in that time. Where a holding deposit is to be retained (actually quite a rare event), written notices will have to be speedily sent to ensure they are given within the 7 days allowed. Following agreement by both Houses on the text of the Bill it received Royal Assent on 12 February. You’re all set. no notice explaining why the holding deposit is not being repaid has been given in writing within 7 days of the decision not to enter a tenancy agreement having been made. The Tenant Fees Act 2019 is no different although it must be said it makes a much more balanced and fairer approach than other legislation. where it is used towards payment of rent or a tenancy deposit with the consent of the payee; the prospective tenant is disqualified as a result of their immigration status and the landlord/ letting agent did not, and could not reasonably have been expected to know, the disqualification applied before accepting the deposit; where the tenant provides false or misleading information to the landlord or letting agent and the landlord is reasonably entitled to take this information into account; the tenant decides not to enter into the tenancy before the deadline for agreement and neither the landlord or letting agent have breached their obligations under the Act nor behaved in a manner that would make it unreasonable to expect the tenant to enter into a tenancy agreement with the landlord; or. The Tenant Fees Act 2019 outlines the Government’s approach to banning letting fees paid by tenants in the private rented sector and capping tenancy deposits. Any financial penalty is on top of being required to repay any prohibited payments or holding deposit received. The Tenant Fees Act 2019 commences on 1 June 2019 and controls what payments a landlord or letting agent can charge a tenant when setting up a new tenancy. With a deposit, if there is damage at the end, the amount for the damage can be deducted. In order to calculate the 5 or 6 weeks rent amount, you first take the annual rent and divide by 52 to get one weeks rent and then multiply by 5 or 6 as appropriate. It’s important to note that the payer must consent for this to be allowed otherwise the holding deposit must be repaid (and then simply take the full rent and tenancy deposit in respect of the tenancy). The maximum holding deposit allowed is up to one week’s rent calculated the same as the tenancy deposit (annual rent divided by 52). The Tenant Fees Act extends the requirement to display fees to cover online property websites that advertise properties to let on behalf of letting agents. Payment of rent under a tenancy is a permitted payment (phew). The agent is arguing that the TFA only applies up to the point the tenancy agreement is signed, after which a tenancy is in place so therefore the landlord is entitled to deduct the rent due from date agreement signed up to start of new tenancy from the security deposit plus the cost of finding the replacement tenant. T he Tenant Fees Act 2019 (“the Act”) introduces fundamental and extensive changes to the fees which landlords or letting agents can seek to recover from the tenant of an Assured Shorthold Tenancy (“AST”) in England since 1 June 2019. All that looks set to change, however, as the Tenant Fees Act comes into force on June 1. Unlike the council tax prohibition before, this part does not require payment be made to the utility supplier. Our tenancy agreements are currently being updated to reflect the changes (for example by changing the interest rate for unpaid rent and a few other tweaks). The Tenant Fees Act 2019 came into force on 1 June 2019 which set out rules to ban letting agents and landlords from charging fees to tenants in England as well as setting a cap for tenancy deposits. Although the legislation is similar to the Tenant Fees Act 2019 in England, it would be a mistake to think it’s the same. It will be for the courts to decide but in our view, the safest option is to refund any excess amount so the question doesn’t arise. The Consumer Rights Act 2015 already requires that any term of a tenancy be “fair” so the Tenancy Fees Act 2019 doesn’t go any further than this for this permitted payment. The act will ban any prohibited fees in all existing tenancies on 1st June 2020. The requiring of a prohibited payment, entering into a third party contract or making a loan applies if the landlord or agent requires any of those things in consideration of the grant, renewal, continuance, variation, assignment, novation, termination, an act or default of such a tenancy (or other agreement in connection with the housing such as a guarantee agreement). The deposit must be repaid within 7 days of the landlord’s decision; or. We'll definitely use the firm again - I could not thank them enough. The deposit must be repaid within 7 days of the deadline for agreement. If the tenancy goes contractual periodic on or after 1 June 2020, this may not be necessary because such a tenancy is deemed as a single tenancy and not a renewal (although we recommend any excess is repaid regardless). And repaying a holding deposit received Act ) recently came in to prior to 1 2019! That you are happy with it authority may also enforce can result in a moment ) the! 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