Tenant Fee Ban and Deposit Cap - June 2019

4th May 2020

Agents and landlords must not require tenants to make any payment or loan as a condition of the tenancy and this includes fees for securing references or inventories or any other front-loading of costs.

The only payments permitted to be charged to tenants are rent; a refundable tenant deposit of no more than five weeks’ rent (where the annual rent is less than £50,000) or six weeks’ rent (where the annual rent is £50,000 or more); and a refundable ‘holding’ deposit of no more than one week’s rent and a payment by the tenant in the event of their default, such as a late payment or breach of the tenancy agreement. Anything else is regarded in law as a “prohibited payment”.

From June 1 this applies to new tenancies only; from June 1 st 2020 this will apply to all tenancies.

Holding deposits must be refunded to tenants within seven days of the tenancy agreement being completed, or within 15 days of taking the deposit if the agreement is not completed for reasons within the agent’s or landlord’s control.

There can be a small fee if a tenant requests a variation of the tenancy, but this is limited to £50 unless additional costs can be shown to have been incurred.

Local authorities, charged with enforcing the legislation, can fine an agent or landlord up to £5,000 for levying a prohibited payment.

Local authorities can prosecute or impose a fine of up to £30,000 if an ‘offence’ under the Act has been committed, being where a landlord or letting agent has been fined or convicted for a breach within the last five years and commits a further different breach.

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