New laws for short-hold tenancy fees in England

The Tenant Fees Act 2019, which came into force on 1 June 2019, has made some very significant changes in the law regarding assured shorthold tenancy fees. The Act will apply to all tenancies and tenancy renewals in England from that date, but it will not apply to periodic tenancies where the fixed-term tenancy began before 1 June 2019.

As its name suggests, the new Act governs fees and payments that tenants pay to landlords (or their letting agents). The Act permits some kinds of payment but prohibits and caps others.

Landlords will still be able to charge tenants a deposit that is potentially refundable at the end of the tenancy. But the amount of the deposit is now capped at five weeks’ rent where the total annual rent is less than £50,000 and six weeks’ rent where the annual rent is higher than this.

And they will still be able to charge a holding deposit to reserve a property for a tenant but the new legislation introduces various requirements. A holding deposit is now capped at one week’s rent, and they will only be able to hold one holding deposit for a property at any one time.

They may still be able to retain a holding deposit if agreement on the tenancy is not reached, but the law is now very prescriptive about this. They can retain it if the tenant changes their mind about the tenancy or in some cases if the tenant has provided false information. And they may be able to retain it if they have taken “all reasonable steps” to enter into the agreement but the tenant has not taken such reasonable steps.

And they will still be able to charge for various other items: eg costs associated with ending the tenancy early if the tenant requests it, costs associated with the tenant losing keys, default payments for late payment of rent or payments for other breach of the agreement.

But – to put it short – most other kinds of fees have now been abolished and made illegal. Referencing fees, credit check fees, inventory fees, tenancy renewal fees, are all gone.

This is only a very brief overview: the law has a lot of fine detail in it. But it is obvious that this is going to shake up the market a bit and put more costs on landlords, either directly or through their letting agents. But in any event it is very important for both landlords and potential tenants to understand the new legislation.