Tenant fee ban becoming law

Landlords need to start preparing for the tenant fee ban now. Here's a brief overview of the key points.

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It’s probably less than a year until the tenant fee ban is in force. With no likelihood of the government changing its mind on the ban you should start making preparations now. Here are some point for you to ponder:

You won’t be able to serve a Section 21 notice if you’ve charged an unlawful fee, at least not until it's repaid.

The ban doesn't cover non housing act tenancies, so if you let your properties to companies etc. then you can charge whatever fees you like.

You can still charge fees on existing tenancies for up to 1 year after the ban comes into force.

The maximum deposit amount is going to be capped at 6 weeks’ rent. The maximum holding deposit will be capped at 1 week’s rent.

A holding deposit can be held for a maximum of 15 unless there is a reason to retain it - i.e. the applicant fails right to rent checks, or is deliberately dragging their feet. You CANNOT keep a holding deposit if a prospect fails the referencing process, unless they lied in the application (and you can prove it)!

For tenants that share you can charge a fee if the tenant requests change of co-sharer. The maximum is £50 or the actual cost to you if less than £50.

Upon early surrender of tenancy can charge a fee, which must be ‘reasonable’.

You must have clause in tenancy agreement stating that the tenant is responsible for council tax, utilities, communications (broadband, satellite or cable tv etc.)

Holding deposits must be repaid to successful tenants, or if the landlord pulls out of the prospective let. However they can be kept if tenant pulls out.

Tenancy deposit replacement scheme renewal premiums are illegal fees if you insist on them – each time that you charge one you have to offer them a chance to pay a conventional deposit instead – somewhat awkward if there's a monthly premium

You can’t charge ‘pet deposits’, but you can charge higher rent for tenants with a pet. You will have to put this higher rent in the particulars of your property advert though.

We’re still awaiting guidance on fees chargeable for a tenant defaulting on tenancy agreement obligations and liabilities. What we know so far is that any charges must be in the tenancy wording and can't be any more than money lost to the landlord - e.g. if it costs the landlord £50 to send a repair man who is then refused entry, £50 will be the maximum chargeable fee.

All fees must also be on a separate fee schedule

Tenants can 'opt in' to a paid referencing service as long as they aren’t penalised for not doing so.

 

 

 

  • Mark Baldwin
  • 16/05/2018
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