Our Guide to the Tenant Fees Act

Posted by Alexander JLO on 29th October 2020 -

The Tenant Fees Act was brought into law in June of 2019 and delivered a set of clear regulations on which fees and charges are permitted for tenants. Outlined in the Act are permitted tenancy deposit caps, which may help you to set reasonable deposits for your tenants. Being familiar with these landlord responsibilities are important, as they apply to all new or renewed residential tenancy agreements which were signed on or after the 1st June 2019.

Which fees are allowed?

Replacement Keys and Security Devices

If your tenant loses a key, or similar security device which gives access to the housing (such as a key fob), you are within your rights to charge the tenant. However, the fees must be reasonable, based on the charges incurred by the landlord. It is a requirement that you place in writing the costs which tenants will be charged for these replacements. As a landlord, it may be useful to store a template email if you have multiple tenants.

Late Rental Flat Fees

In the event that your tenant may fail to pay their rent on time, there is a 14-day period from the rent due date reflected in your contract where you may not charge any fee. The fixed payment is an additional charge on top of the rental amount which is outstanding, and is completely optional for you to charge as a landlord. The additional charge must be no more than 3% above the Bank of England’s base rate for each day, and can be applied to the days where rent remains outstanding beyond the initial 14-day period.

During the current outbreak of COVID-19, tenants may struggle to pay their rent on time. It is important to support your tenants during this time if they approach you about struggling to pay their rent. In this case, it may be more helpful to offer them a rent reduction or a pause on rent, to make payments more manageable. Buy-to-let landlords may be eligible for mortgage payment holidays if their tenants are facing financial hardship. Any agreements between you and your tenants during this time should be agreed in writing.

Replacing or amending your contract

If you are renewing your contract, creating a new contract, or if your tenant has requested to make an amendment to your current contract, the amount which you may charge must be up to £50. Charges for renewing a contract are entirely optional, and are not typically charged when building a loyal connection with quality, longer-term tenants. If the charge is more than £50, a landlord may be required to prove that this charge reflects the reasonable cost of amending the contract.

Amenities and Bills

If a telephone, internet, cable TV, satellite TV, or TV licence service is contracted by a landlord for their tenants, this should be reflected in the contract. The amount that is outlined in the contract must reflect the reasonable amount that the services cost. Additional charges are not permitted by the Act.

Likewise, if utility bills, such as electricity, gas or other fuel costs are included in a contract, this must be treated in the same manner as communication services. Additional charges added to any of these services, contracted and paid for by the landlord, could put a landlord in a position where they may be fined.

Third-party contractors

When your tenants move out of your property, it is reasonable to expect the housing to be cleaned to an excellent standard. However, this can raise questions of whether landlords can charge individuals for a professional cleaner, or other third-party contracting service, such as a gardener.

Any third-party contractors should be paid by the individual who has contracted the service. If a landlord hires a cleaning service, which is not reflected in the contract with tenants, the landlord must also pay for the service themselves.

What is the deposit cap in the UK?

As a landlord, a tenancy deposit is an important payment to provide a safety-net against potential damages that may be caused by a tenant. The deposit can also act as a discharge payment to cover any liability which is lost by a tenant if they withdraw early from their contract. 

A holding deposit occurs when money is paid by or on behalf of a tenant to a landlord, with the intention that it is dealt with by the landlord. This deposit usually occurs before the grant of the property, as a way to secure the property.

The requirements of a holding deposit are:

• The amount must not exceed one week’s rent, with no additional charges.
• The holding deposit becomes prohibited if there is a prior deposit from the same tenant that a landlord has not repaid in full.
• If the landlord has previously received a holding deposit for the same property, it becomes prohibited.

A regular deposit is a permitted payment which landlords can expect from a tenant, but there are some clear guidelines offered under the Act which landlords must follow. This deposit is typically used to cover potential damages and to protect the landlord if the tenant moves out of the property early, without sufficient notice.

These requirements are:

• A deposit must be refundable and no more than 5 weeks’ of rent where the total annual rent is less than £50,000.
• When the annual rent exceeds £50,000, the deposit must be refundable and no more than 6 weeks’ of rent.

It is vital for landlords to be aware of the Tenant Fees Act, to maintain a positive relationship with tenants, and to be aware of their rights. Having knowledge about the Act can also make understanding reasonable costs and deposits clearer for landlords, without fearing that they will incur any fines. Landlords may often wonder what ‘reasonable’ charges may look like for their tenants, and we hope that this blog assists you in highlighting some of the most common charges under the Act.

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If you are a Landlord with a query on Landlord and Tenant law why not contact one of Alexander JLO’s experts in the field for a free, no obligation consultation?