Personal Services

Law Guide

Fees ban

Contents

England

From 1 June 2019, landlords and letting agents in England will no longer be able to charge tenants certain fees before and after they rent a property. This will also apply to asking someone to make a payment on the tenant's behalf, such as a guarantor or parent. The ban will initially apply to new and renewed licences and fixed-term assured shorthold tenancies after 1 June. By 1 June 2020, it will apply to all other existing licences/tenancies.

The law will apply to:

  • Private landlords renting their property under an assured shorthold tenancy (AST)
  • Private landlords renting their property under a licence to occupy, such as to lodgers or students
  • Letting agents

Examples of banned fees

Examples of things that landlords and agents won't be able to charge for include:

  • Performing credit checks
  • Obtaining references
  • Performing/obtaining an inventory
  • Providing contractual agreements, such as an AST or for a guarantor
  • Sending rent reminder letters
  • Services such as professional cleaning and gardening during the course of AST/licence agreement
  • Arranging to de-flea the property as a condition of allowing pets
  • General 'administration' charges.

Banned actions

You won't be able to require your tenant, a person acting on their behalf or someone guaranteeing the payment of their rent, to:

  • Make a banned payment to you or someone else connected to the AST or licence agreement
  • Enter into contract for the supply of a service or insurance (excluding contracts for electricity, gas or other fuel; water and sewerage; or for a landline telephone, the internet and cable or satellite television).
  • Make a loan to anyone connected to the tenancy or letting.

You also can't require the tenant, or anyone else connected to the AST or licence, to do any of the above by:

  • Requiring it to be done before you'll grant, renew, continue, assign, replace or end an AST or licence, or before you provide them with a reference
  • Inserting a clause in the agreement stating it must be done (or intending/implying that it should be done)
  • Requiring it to be done because they've breached the AST or licence agreement, or for any other reason.

Allowed payments

The following payments will not be banned:

Taking a holding deposit

This will be allowed, but limited to a maximum of 1 week's rent. Once taken, you have 15 days to make a decision about the tenant and for an agreement to be agreed and signed (the deadline).

You must repay the holding deposit:

  • Within 7 days of the date of the AST/licence agreement, unless the tenant agrees to it being used towards the first payment of rent or towards the deposit
  • Within 7 days of the deadline, or within 7 days of deciding not to enter into an agreement to let the property (whichever comes first)

You won't have to make a repayment in certain circumstances, such as if the tenant:

  • informs you before the deadline that they no longer want to rent the property
  • fails a right to rent check
  • provides false or misleading information or
  • fails to enter into an agreement before the deadline, provided you took all reasonable steps to help them to do so.

Deposits

This will be allowed, but limited to a maximum of 5 weeks' rent where the annual rent is below £50,000, or a maximum of 6 weeks' rent where the annual rent is £50,000 or more.

Rent

Rent, of course, will be allowed, but the law prevents certain practices in an effort to prevent landlords from getting around the ban. For example, you won't be able to set a higher level of rent for the first portion of the AST/licence and then drop it down afterwards.

Utility and communication services

You can continue to charge tenants for the billed amounts (but no more than this) of council tax; electricity, gas or other fuel; water and sewerage; landline telephone, internet, TV licence and cable or satellite television.

Breaches of the agreement during the letting

Only 2 types of losses can be recovered: loss of keys and late payment of rent.

  • Landlords are allowed to charge the reasonable cost of replacing lost keys, as long as they provide written evidence of the cost (e.g. a receipt).
  • Landlords and agents can only charge 3% above the Bank of England base rate in interest on the late payment of rent, starting from the date the payment is missed.

Changing, assigning or replacing an agreement at the request of the tenant/licensee

This must be the reasonable costs of the person receiving the payment and no more than £50.

Ending the agreement early at the request of the tenant/licensee

The cost cannot be more than the loss suffered by the landlord as a result of the early end.

Breaches of the agreement after the letting

Where the tenancy/licence has been breached and caused damage, landlords can still seek compensation via deductions from the deposit or court action.

Scotland

In Scotland there has been a ban on charging fees to tenants since 2012 following changes made to the Rent (Scotland) Act 1984.

The law states that any fee other than rent and a refundable deposit is not allowed. This includes charging fees for references, tenancy paperwork, inventories and the renewal of a tenancy agreement.

If a fee is charged for anything other than rent or a deposit, the tenant can reclaim it from you or the letting agent.

Northern Ireland

There are no laws banning the charging of fees to tenants, though there have been recent cases of tenants successfully challenging in court certain fees charged by letting agents.

Wales

The Welsh Government has introduced a bill banning tenant fees in the private rented sector, however, it is yet to become law.