Tenant Fee Ban – Transition period comes to an end

The Tenant Fees Act 2019 provided for a 12-month transition period for tenancies which started before June 2019 and ends on 31 May 2020, meaning any tenancy clauses in existing contracts that charge fees will become unenforceable after this date.

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.

Here are some key things to be aware of:

Check-out fees

Landlords 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. Agents/landlords 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 now ending from 1 June 2020, the ban applies to all tenancies (both Fixed Term and Periodic) regardless of when the tenancy started.

Tenancy Deposits

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 (ASTs and Licenses to occupy) from 1 June 2020.

Agents and landlords 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. 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. Agents should liaise with the Tenancy Deposit schemes when dealing with calculations.

Section 21

A Section 21 notice cannot be issued in relation to the tenancy if Prohibited Payments or Holding Deposits need to be repaid.