Tenant Fees Act (2019): An overview

The Tenant Fees Act will come into force on 1st June 2019. At the centre of the new law is a ban on all tenant fees, including agency and any third party fees.

tenant fee act 2019

The guidelines from the government will come soon, but here’s what we know so far about the Tenant Fees Act (2019).

What does the Act comprise of?

Here are the key parts of the Act:

tenant fee act 2019

All Payments Are Prohibited Except Rent, Utility Bills, Deposits (and 2 Exceptions)

Tenants will no longer be responsible for any costs except: the rent, the tenancy deposit and a holding deposit (more on these below).

This means it is no longer possible to ask tenants to cover the cost of their own referencing. Tenants will not be able to be charged for check-in, inventory or set up fees. These fees will be deemed prohibited by law

The only two exceptions are two forms of ‘default’ fee. These fees are chargeable during the tenancy in the following circumstances, provided the relevant clauses are written into the tenancy agreement.   

a) Late Rent Fees

Fees will be charged for rent payments that are over 2 weeks late. The fees can be up to 3% over the prevailing Bank of England base interest rate. Because this is an annual interest rate, the amount will need to be calculated for the pro rata interest accrued on the outstanding rent.

For example:

The tenant is 30 days late for one £1,500 rent payment.

The base rate of interest is currently 0.75%, therefore the amount the tenant can be charged for is the outstanding rent plus a fee of 3.75% of outstanding rent, pro rata for the 30 days. (3.75% of £1,500 is £56.25.) 30 days is 30/365 of the yearly rate. Therefore, the pro rata amount is calculated by multiplying £56.25 by 30/365, which is £4.62.

Landlords will of course still be able to serve Section 8 notices for late payment of rent provided the rent is 2 months or more in arrears.

(b) Lost Keys

Tenants can be charged for losing their keys (or other security device) but the charge must be a reasonable amount for which evidence must be provided.

Both default fees will need to be included in the tenancy agreement to be able to charge them, and previous rules about fair clauses will still apply.

It has also been advised that landlords shall be able to charge up to £50 for a change of tenant, and with regards to an early surrender request by a tenant, a landlord shall be able to charge the tenant for the remaining unexpected void period.

tenant fee act 2019

Cap on Tenancy Deposits

The amount of security deposit that can be requested is being reduced to 5 weeks for AST’s (Assured Shorthold Tenancies) and licences where the rent per annum is up to £50,000, and up to 6 weeks for those tenancies over £50,000 in rent per annum.

This applies to all tenancies regardless of the reason a higher deposit was taken previously. (ie: if there was poor credit etc.)

The ability to request a higher deposit due to the applicant having a pet has also been removed, however, if landlords will consider a pet, when marketing the property, it can be advertised at 2 rental amounts (ie: £1,500 p.c.m. or £1,550 p.c.m. with 1 x pet)

tenant fee act 2019

Cap and New Rules on Holding Deposits

Holding deposits will be limited to one week’s rent.

The holding deposit can only be held for 15 calendar days unless another ‘deadline’ date is agree in writing subsequently by both parties.

After the deadline, the holding deposit must be repaid within 7 days.

The holding deposit must be returned to the tenant via a refund or by being put towards the first rental payment if agreed in writing.

There are some exceptions. In these cases the holding deposit shall be forfeited  but a reason must be given in writing to the tenant within 7 days:

  • The tenant withdraws
  • The tenant doesn’t take all reasonable steps to enter the tenancy in the required time
  • The tenant fails a right to rent check
  • The tenant provides misleading information which materially affects their suitability to rent the property
tenant fee act 2019

What Are the Penalties to Landlords Who Charge Tenant Fees?

Any person,  landlord (or agents) or any third parties who charge fees to Tenants could face paying huge fines.

The first offence would be a civil offence, with a fine of £5,000.

If the offence is repeated within five years, this would be deemed a criminal offence and levies a fine up to £30,000.

Local Trading Standards organisations will enforce the ban.

Luxury Property Rental Preview

photo period property

This property preview is showcasing a beautiful country house, which is due to the market soon with an anticipated guide range of £7,500 to £8,500 p.c.m.

The property is a significant freehold steeped in history dating to the 15th century. Formerly the Manor House of Great Bramshill Manor, the house began as a timber framed hall in the late medieval period and it was progressively extended and developed through to the 19th century.

The result is a substantial Grade 11* listed country house of several periods, culminating in extensive refurbishment and development between 1990 and today by the current owners; resulting in a rare achievement where historic character and subtle contemporary fuse perfectly.

photo property farmhouse kitchen
farmhouse luxury kitchen

There are many notable historic architectural features including three massive Tudor chimney stacks, each with three separated diagonal flues on a rectangular base.

Inside the house there still exists magnificent Tudor brick fireplaces with four entered arches and the original 15th century winding staircase has been preserved.

photo property banqueting barn
banqueting / entertainments barn

Immediately outside there is a magnificent Grade 11 listed banqueting barn dating to the 17th century, formed of six timber frame bays, with gabled projecting porch. Leading off of this barn there is a wonderful gym space with shower.

photo property banqueting barn
banqueting / entertainments barn
photo property banqueting barn
gymnasium

Within the grounds of around 3.3 acres the formal gardens and entertaining areas are of special note, featuring a heated swimming pool and a tennis court.

photo property swimming pool
swimming pool
photo property swimming pool
swimming pool with entertainments barn in background
photo property tennis court
tennis court

For further details about this property, telephone Jacy Barwick on 01252 842100 or visit our residential letting agents and property management experts

Brexit Uncertainty Brings Uplift In Top End House Rentals

Uncertainty around Brexit driving buyers to rent instead of buy

There is an unexpected short term boost in the higher end of the residential rental market going on right now, because of austere house purchase stamp duty levels and Brexit uncertainty.

A number of high end house buyers are deciding to pop into a property rental for the next year or so, using the stamp duty funds they would have allocate on a property purchase around £2.0m. or more, to pay for the property rental instead of going into the Government coffers by way of stamp duty (about £154,000 at £2.0m. and £274,000 at £3.0m.).

The property above has been placed on the rental market today at £6,000 p.c.m.. This is an example of a luxury house in Berkshire which will attract interest from tenants wishing to live near say Wellington College, Reading and Wokingham yet have easy access to London. The video production and photography by johnjoe.co.uk will no doubt enable a quick uptake in tenant enquiries.

The medium term outlook for top end rentals is good, and for house sales over £2.0m. there could be good new post Brexit because the level of hot buyers in rental looking to buy will be at a good level.

The market insight is that the first half of 2018 saw one of the poorest levels of house sale transactions for some time, however, right now, discerning house buyers are seeing the current market conditions as an opportunity to move whilst prices remain static. The news for house sellers is that you can and will sell successfully in today’s market, but don’t expect a fancy or inflated price.

Large house price gains are gone for a while, but like all markets when they rebound from a low they come back with a sharp and fast uptake. Savvy buyers know this and are taking care of business now.

Another example of positive movement in the rental sector £5,000 to £8,000 p.c.m. is the property shown below, which was recently snapped up by a tenant on a guide of £7,995 p.c.m. So, if you are a landlord looking for an agent to manage and rent a luxury property then go to mccarthyholden.co.uk

High end property rentals boost for estate agent McCarthy Holden
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