TENANT FEES ACT 2019 – TRANSITION PERIOD HAS ENDED
The Tenant Fees Act 2019 provided for a 12-month transition period for tenancies which started before June 2019 and ended on 31 May 2020, meaning any tenancy clauses in existing contracts that charge fees are now unenforceable.
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.
Any breach of the fee ban will incur a penalty of up to £5,000. Successive breaches can result in a criminal offence and an unlimited fine.
Here are some key things to be aware of:
You should be aware that tenants on existing contracts which involved paying check-out fees up front, these become Prohibited Payments as of 1 June 2020, you will have 28 days in which to repay these fees to tenants or they will be in breach of the legislation.
End of the transition period
During the transition period fees written into existing contracts could continue to be charged. However, with the 12-month transition period ended on 1 June 2020, the ban applies to all tenancies (both Fixed Term and Periodic) regardless of when the tenancy started.
The Act set a cap (five or six weeks rent dependent on the amount of rent paid annually) for how much could be charged as a security deposit on a tenancy. This will apply to all relevant tenancies (Assured Shorthold and Licenses to occupy) from 1 June 2020. Positive note, you do not need to immediately refund any part of an existing Tenancy Deposit that exceeds the cap of five or six weeks' rent and can hold this for the duration of the existing tenancy as long as the tenancy is classed as periodic. However, where a tenant renews their tenancy by signing a new Fixed Term agreement on or after 1 June 2019, any amount of their existing deposit which exceeds the applicable five- or six-week limit must be refunded to ensure the new tenancy complies with the tenancy deposit cap. Plus note when working out the new allowable deposit amount this is taken on the new rent if the rent has been increased for the new fixed term period.
A Section 21 notice cannot be issued in relation to the tenancy if Prohibited Payments or Holding Deposits need to be repaid. The Tenant Fees Act 2019 provided for a 12-month transition period for tenancies which started before June 2019 and ended on 31 May 2020, meaning any tenancy clauses in existing contracts that charge fees are now unenforceable.
We hope the above helps. Should you have any questions please don't hesitate to contact me.
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