Tenant Fees

This information only applies in England and Wales

The Tenant Fees Act 2019 (TFA 2019) came into force in England on the 1 June 2019 and the 1 September in Wales. Tenants, landlords and agents should understand what the ban includes and what fees are permitted. The Act is intended to restrict the kinds of payments that landlords and letting agents can charge to tenants in connection with the letting of a property, such as holding deposits and cleaning costs. Read this quick guide for more information.

The general position is that if a fee is not specifically allowed, it is banned. Landlords and letting agents must not require tenants (including prospective tenants and guarantors) to make any prohibited payments.

The following is an exempted list (ie the fees that are permitted):

  • Rent

  • Utilities and council tax – if this is included within the tenancy agreement

  • A refundable tenancy deposit – capped at no more than 5 weeks’ rent where the annual rent is less than £50,000 or six weeks’ where the total annual rent is £50,000 or above

  • A refundable holding deposit to reserve the property– capped at one week’s rent

  • Changes to the tenancy requested by the tenant – capped at £50 or reasonable costs incurred if higher

  • Early termination of the tenancy requested by the tenant

  • Defaults by the tenant – such as fines for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement

If a current tenancy started before the 1 June 2019 in England or the 1 September 2019 in Wales, then the legislation doesn't apply. Tenants can still be charged fees until 31 May 2020, if they are required under an agreement (eg tenancy agreement). Whilst the landlord doesn’t have to return any fees in that case, the landlord may have to return part of the deposit which is above the cap if the tenancy is renewed.

However the new law states that any tenancy agreement, student let or licence to occupy housing in the private rented sector (think lodger agreement) which started on 1 June 2019 or after must comply with the new rules.

Where a breach has occurred and a banned fee or payment is taken, tenants will be able to get any money wrongly paid back via the county court. Local Trading Standards can also assist tenants with this.

In addition, local trading standards will be required to enforce this legislation and will issue a fine of up to £5,000 for a first offence. Subsequent breaches are criminal offences or alternatively, the landlord can be fined up to £30,000 as a civil penalty and be subject to a banning order.

If you collect a ‘prohibited’ fee you should return the payment immediately and in any event the fee must be returned within 28 days. You should also return any tenancy deposits over the cap for fixed term contracts which are renewed for another fixed term, even if this is at the same property.

You also won’t be able to evict the tenant using the Section 21 procedure until you have repaid any unlawful fees.

If you’re a landlord or letting agent, you will have to re-evaluate your current business model. The prohibition on fees could heavily impact on some business models (particularly small businesses or individual landlords).

Similarly, it is vital that landlords and agents consider whether their current tenancy agreements and holding deposit forms are fit for purpose.

You should also consider updating your tenancy agreements for any new tenancies in order to comply with the law and revise your policies on holding deposits and deposit protection schemes.

All of Rocket Lawyer’s tenancy agreements have been updated to reflect these new changes. Create your Tenancy Agreement with Rocket Lawyer and read our guides on Rent residential property.

Similar changes have been in place in Wales since 1st September 2019. You can find more information about tenant fees in Wales here.

Ask a lawyer if you have any questions.