The aim of the Act is to reduce the costs that tenants can face at the outset, and throughout, a tenancy. All payments are prohibited unless the payment is expressly permitted under the Tenant Fees Act. The Act refers to a tenant or a ‘relevant person’ which includes a prospective, current or a former tenant or licensee and includes a guarantor or anybody acting on behalf of the tenant. A tenant’s regular payment of rent to a landlord for the use of the property under a tenancy is a Permitted Payment. Tenancy Deposits are capped at five weeks’ rent where the annual rent of the tenancy is less than £50,000 and six-weeks’ rent where the annual rent of the tenancy is £50,000 or more.
Under the Tenant Fees Act, landlords and letting agents will no longer be able to take a higher security deposit for tenants with pets; the maximum five or six weeks rent for Tenancy Deposits cannot be exceeded. A Holding Deposit is a payment made by a tenant to a landlord or letting agent to reserve that property and is capped at one weeks rent. The only circumstances under which a landlord or letting agent can charge a default fee during the tenancy is if the tenant loses their key or other security device giving access to the property, or if they fail to pay their rent on time. The tenancy agreement must specify the circumstances in which payments in the event of a default may be required.
A payment of damages for the breach of a tenancy agreement is a permitted payment. No Section 21 notice may be issued in relation to the tenancy so long as all or part of a Prohibited Payment or Holding Deposit has not been repaid to the relevant person. A breach of the fees ban will be a civil offence with a financial penalty of up to £5,000. Successive breaches of the ban within five years would be a criminal offence with an unlimited fine or a financial penalty of up to £30,000 as an alternative to criminal prosecution. Enforcing authorities can also apply for a Banning Order and if granted, an entry must be made in the Database of Rogue Landlords and Letting Agents. We work hard to ensure that all our clients are aware of changes to legislation and that they are protected.