Jonathan Lynn, Partner of Property Law specialists, Courtyard Solicitors, gives his thoughts thoughts on the Tenant Fees Bill.
The Tenant Fees Bill is now at the report stage in parliament and is therefore likely to come into law next year. It is too early to say when the commencement date will be.
There are a number of features to this legislation. The law will apply to all private sector assured and assured short hold and will apply to all new tenancies and all renewals of tenancies.
Ban on upfront fees.
When the law comes into force all upfront fees that are not exempted will be banned. The fees that are not banned are holding deposits, rent, deposits and charges for defaulting on the contract (eg. reminder letters for non-payment of rent).
Fees that will be banned will include but not be limited to the following: charging for a guarantor form, credit checks, inventories, cleaning, referencing, professional cleaning, admin charges, requirements to have specific insurance providers, gardening services, charges for changing tenants, charges for early termination. (This means charges over and above outstanding rent obligations).
Deposits.
The maximum value of a holding deposit will be restricted to the equivalent of 1 weeks rent.Security Deposits will be restricted to a maximum value of 5 weeks rent.
Enforcement
Where a banned fee or payment is taken, tenants will be able to get any money wrongly paid back through the county court. In addition, local trading standards will be required to enforce this legislation and will issue a fine of up to £5000 for a first offence. Further 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.
Section 17 (1) (3) of the bill states as follows
“No section 21 notice may be given in relation to the tenancy so long as all or part of the prohibited payment or holding deposit has not been repaid to the relevant person.”
So if the tenancy is an assured shorthold tenancy no s21 (ie: no fault) possession proceedings can be brought against the tenant. When the bill is law this is another technical defence that may be available to tenants in a section 21 case.
If you have a dispute about a tenancy please feel free to contact Jonathan who would be more than happy to help.
