Illegal Fees can Lead to Landlord Fines

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From 1 June landlords and letting agents in England have been able to charge tenants with very few fees on top of rent. It is now illegal to charge for drawing up tenancy agreements or for cleaning, for example, with large fines possible for those who break the rule.

The change, introduced by the Tenant Fees Act 2019, has applied to new tenancies for the last year. It now applies to all tenancies in England.

The amount landlords can charge for security deposits or holding deposits is also limited under this piece of legislation.

Security deposits may not exceed five weeks’ rent (unless the annual rent for the property exceeds £50,000) in which case the deposit is capped at six weeks’ rent.

Holding deposits are limited to one weeks’ rent.

The only fees that can now be charged are:

  • Rent;
  • A refundable tenancy deposit;
  • A refundable holding deposit;
  • Payments associated with early termination of the tenancy requested by the tenant;
  • Payments capped at £50 (or reasonably incurred costs, if higher) for the variation, assignment or novation of a tenancy;
  • Payments in respect of utilities, communication services, TV licence and Council Tax; and
  • A default fee, where written into the tenancy agreement, for late payment of rent or replacement of a lost key or security device giving access to the rental property.

Landlords who do not comply with this legislation could face fines of up to £5,000 for each offence. Repeat offenders could face larger fines, banning orders or criminal prosecution. Charging of prohibited fees will also impair landlords’ ability to gain Section 21 possession.

The Tenant Fees Act applies to landlords in England only. Wales has equivalent but not identical legislation (the Renting Homes (Fees etc) (Wales) Act 2019), introduced on 1 September last year.

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