Tenant Fee ban to come into effect on 1st June; What does it means for Landlords?

The Government have confirmed the Tenant Fee Ban will come into place on Saturday 1 June 2019, subject to scrutiny from the House of Commons.

Pushing the Spring 2019 deadline almost to the last minute, the Government have finally confirmed the intended launch date of the Tenant Fee Ban.

Both landlords and letting agents will no longer be permitted to charge tenants for anything with the exception of rent and deposits.

This means that business services such as referencing are no longer able to be cost covered by tenants. As a result of the date announcement, we thought we’d take another look and a reminder of what landlords and letting agents can and can’t do once June is upon us.

What can’t I charge tenants for as a landlord?

  • Credit checks
  • Referencing and further administration checks
  • Property inventories
  • Professional cleaning services
  • Gardening services
  • Fulfilling specific requirements for insurance providers
  • Pet cleaning fees (ie, having to de-flea a property)

Furthermore, landlords will be restricted from inflating rental figure costs for a short duration at the start of tenancies and then reducing down the line in order to offset the initial costs currently made at the beginning of tenancies.

Increasing the rental figure on the whole on a permanent basis is considered fine by the nature of the act, but this of course may have an impact on the number of interested parties looking to take up tenancy in your property.

What will happen to deposits?

Holding deposits will be set to a maximum rent of 1 week subject to statutory legislation on the repayment of this should the tenancy not go ahead.

To start with, this proposal includes:

  • The landlord has 15 days to make a decision once a holding deposit is taken.
  • If the tenancy does not go ahead then the money must be repaid in full within 7 days of the deadline being reached or the landlord backing out.
  • Repayment does not need to be in full if the tenant backs out of the tenancy agreement themselves, fails right to rent checks, has provided false or misleading information, or where the landlord tries their best to get the information needed but the tenant fails to provide it within the 15 days.
  • If the tenancy does go ahead, the holding deposit must be returned within 7 days of agreement, unless it is converted into part payment of the actual deposit or used towards the initial rent payment.

Deposits will be limited to 5 weeks rent as a maximum amount for tenancies where the annual rent is below £50,000. This has gone up from the originally proposed limit of one month. Deposits for tenancies where the annual rent is £50,000 or more are limited to the equivalent of 6 weeks rent.

What are the consequences if I charge my tenants?

In the event that a landlord or agent continues to charge fees to tenants for elements outside of the bill come 1 June, a series of fines will be faced:

– First offence is considered a civil offence and will land a fine of £5,000.
– If a second offence is repeated within five years of the first, this will be considered as a criminal offence or a fine of £30,000.

Abode prides itself on rigorously adhering to any and all new regulations to ensure total legal compliance for our landlords. If you’re a self-managed landlord or property investor and are unsure as to a strategic approach managing your properties following the ban, give us a call (0161 883 2525) and we’ll be more than happy to give you the correct advice to ensuring you and your properties are compliant whilst also correctly placed to maximise your profit.



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