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It still needs Royal Assent, but the Tenant Fees Bill seems set to become law on 1st June 2019 and will apply to all tenancies that come into force after that date.
Some may question why further legislation was needed. After all, the tenancy deposit protection legislation was introduced for all tenancies agreed from April 2007. However, the important distinction from the Tenant Fees Bill is that landlords and agents will only be able to take rent in advance or deposit payments from tenants.
I warned some time ago that Shelter and CAB looked set to campaign against the administration fees that some agents and landlords charged. My advice when I first became aware of rumblings was that landlords who charged administration fees be able to justify what they asked for. Some landlords asked for an administration fee which they held in place of a deposit – except that it was never returned to the tenant, irrespective of the condition in which the property was left.
For the small-scale landlord, with perhaps only one or two properties, confused by legislation, there may be some sympathy with the idea of taking an administration fee and avoiding the bureaucracy of protecting deposits, but many agents will manage dozens, if not hundreds of properties and will charge each a hefty administration fee. In addition to up to 2 months deposit that the law then allowed and a month’s rent in advance, which put private renting out of the reach of many.
The new Tenant Fees Bill legislation will limit the maximum size of deposit to 5 weeks rent where the rent is less than £50,000 per annum. For some reason, it was felt necessary to re-iterate that a landlord can claim from the deposit for damage to the property, replacement of keys if the tenant loses them and where the rent is paid late. Surely in the 12 years since Tenancy Deposit Protection was introduced, most people have become fully cognisant of the fact that these are the only circumstances in which a landlord can make a claim from the protected deposit? I have been unable to think of any other circumstances which would allow a claim to be made.
There are also clear directions in the Tenant Fees Bill that relinquishment of a tenancy before the end of the term, means the tenant can be required to pay the rent for the whole of the fixed term. This is civil law and has always applied if a tenancy has been signed and agreed by the tenants. However, though that may be what the law says, most landlords will be aware that they may not know where the tenant has gone, and if the tenant is not in employment, collecting the outstanding rent may be well-nigh impossible so hardly worth mentioning it in the light of this legislation.
It all sounds fairly easy, but the difficulty in making a claim from the deposit is the burden of proof. Don’t try and claim for a new carpet without an inventory showing the carpet in immaculate condition and photos showing stains/cigarette burns/parts where the dog has chewed it.
Likewise, do not try to claim for rent to the end of the tenancy without being able to prove what you have done to try and get a new tenant rather than just take the deposit. I know of landlords where a tenant has left without notice, but within days they have found a new tenant. This has not stopped them taking the deposit from the first, whilst accepting a deposit from the second. Beneficial to the landlord, but most detrimental to the reputation of the sector.
The Tenant Fees Bill will be lauded as greater security and protection for the tenant. It will be a blow to the landlords who charge administration fees but should cause little concern to the landlords who usually ask for only one months’ rent as deposit or rent in advance.
Landlords that show concern for their tenants, that try and act reasonably, will not fall foul of this legislation.
For advice on buy to let issues – Ask Sharon