Another month and yet more legislation ... One of the largest and impactful changes to the rental market in recent years (and there have been many changes!) comes into force in England on 1st June 2019. 

From this date the 'Tenant Fees Act 2019' will become law and applies immediately to any tenancy agreements signed on or after 1st June 2019, affecting all Landlords, Tenants and Letting Agents. 

From the 1st June 2019 it will become illegal for Letting Agents or Landlords to charge fees to tenants, apart from a small number of 'permitted payments'.

The permitted payments are;

1)    Rent – The first rental payment MUST be the same as the remaining payments.

2)    Utilities, Council tax & TV licenses & communication service

3)    A Capped refundable Security Deposit - Deposits will be capped at 5 weeks rent (or 6 weeks if the annual rent is over £50,000 - not a regular occurrence in Gravesham!). If a tenant has paid a higher deposit for an existing tenancy when a new contract is signed a refund of anything over the 5 or 6 weeks will have to be sent to the tenant. For periodic tenancies there is a transitionary 12-month period ending 31 May 2020. No increased deposits can be taken for tenants with pets.

4)    A Capped Refundable Holding Deposit – Landlords & their agents can no longer charge a tenant for referencing; we are however able to take from the tenant a 'holding deposit' to secure the property, for a maximum of 15 days (deadline for agreement). This must not exceed 1 weeks rent and must be deducted from the first months rent or deposit once acceptable referencing has been returned. Should the tenant be unsuccessful then the holding deposit must be returned to the tenant, there are only a few very specific reasons that we are able to keep this holding deposit. 

5)    Payment in variation, assignment or novation of a tenancy – Landlords or their agents can charge a maximum of £50 when a  tenant requests a variation, assignment or novation of a tenancy.

6)    Payment on termination (surrender) of tenancy – We can require the tenant to make a payment for early termination that must not exceed the cost borne by the Landlord.

7)    Default charges – The only circumstance a landlord can charge for a default payment is if a tenant loses a key or security device or if the rent is late. The rent must be over 14 days late. This charge can only be 3% above the base rate.

8)    Green Deal Charge – A payment towards Energy Efficiency improvements under a Green Deal can be charged if included within the tenancy agreement.

9)    Fees for changing a tenant or ending a tenancy early – Thankfully should a tenant wish to break a contract and vacate early Landlords and their Agents are still allowed to charge for the loss suffered by the Landlord and rent. 

Landlords and their agents will still be able to charge fees on pre-existing tenancies until 31st May 2020. If a tenancy becomes periodic (i.e. continues after the end of a fixed term) fee’s can be charged up until 31st May 2020. 

A breach of the fees ban will be a civil offence with a financial penalty of up to £5,000 and with successive breaches would be a criminal offence with an unlimited fine or prison sentence.  

For those landlords that will accept pets we can no longer charge an increased deposit, however what we can do is charge a higher monthly rent. This must be advertised clearly and communicated to perspective tenants ASAP.

At M&M we are offering our Tenants and Landlords the option to rent using a 'Deposit Free option' using 'Flatfair'. This provides our Landlords with double the protection, enabling them to claim 12 weeks rent at the end of a tenancy. Contact our office today to find out more. 

Sarah Driscoll

Director

01474 321957

lettings@mandmprop.co.uk