The Tenant Fee Act is important legislation for tenants and landlords in England.
Read on to learn what it is, where it applies, and its advantages and disadvantages.
What is the Tenant Fee Act?
The Tenant Fee Act bans landlords and letting agents from charging tenants certain fees.
It came into force in England on 1 June 2019. Before, tenants could be charged fees for:
- Viewings
- Credit checks
- References
- Tenancy agreements
- Inventory checks.
Now, it’s illegal for landlords or agents to charge tenants fees. Except for:
- Monthly rental charges
- A refundable deposit of no more than 5 weeks’ rent where the total yearly rent is less than £50,000, or 6 weeks’ rent where the total annual rent is £50,000 or more
- A refundable holding deposit, which should not exceed one week’s rent
- Payments associated with early termination of the tenancy, when requested by the tenant
- Payments for utilities, communication services and council tax
- Default fees for late payment of rent and replacement of a lost key/security device, where they are reasonable.
Why was the Tenant Fee Act brought in?
The Tenant Fee Act was introduced to improve transparency and competition and make renting more affordable.
Before the Act, the fees charged to tenants were often expensive and unclear. And they varied between landlords and agents.
For example, some tenants were charged over £300 for references or renewal fees.
Does the Tenant Fee Act always apply?
The Tenant Fee Act applies to new or renewed tenancy agreements signed on or after 1 June 2019 in England. It covers:
- Assured shorthold tenancies
- Licenses to occupy housing
- Student accommodation.
However, there are some exceptions where the Act may not apply, such as:
- Social housing tenancies (like council houses or housing association homes).
- Extended leasehold properties (for which the lease is over 21 years)
- Tenancies of seven years or more
- Tenancies where the rent is over £100,000 per year
- Universities, colleges or schools that directly manage student accommodation.
So, the Tenant Fee Act will apply to most standard private tenancies. But, fees can still be charged outside the rules.
How to find out if someone is violating the Tenant Fee Act
Check the government guide
You can see precisely which fees are now illegal. Any not on the permitted payments list could be against the law.
Complain directly to the landlord
Put this in writing. State the Tenant Fee Act prohibits fees. Ask for a refund.
Report them to Trading Standards
This can be done via the Citizens Advice Bureau. Trading standards can investigate and take legal action if needed.
Report to the university accommodation service
You could also report to the student union for student properties. They can challenge the landlord or agent on your behalf.
Ultimately, tenants can take their own legal action by writing a letter before action.
And then making a claim through the small claims court if the fee is not refunded. Landlords in breach of the Act can be fined.
Keeping receipts, tenancy agreements, and correspondence is vital.
Tenants have up to 12 months after leaving the property to claim back unlawful fees.
Advantages of the Tenant Fee Act
Save money
It saves tenants money by removing unfair fees. It makes renting more affordable and reduces barriers to finding a home.
Improve transparency
It creates more transparency around precisely what fees can be charged.
And it drives up standards and encourages good service from landlords and agents.
Greater consumer power
It gives tenants greater consumer power to challenge dodgy fees through official routes.
Simplification
Simplifies and standardises the rental market. Most letting agencies adopt the same fee policies.
Disadvantages of the Tenant Fee Act
Whilst the Act brought about some clear advantages for tenants and the market, it also had some unintended consequences.
Without a wider study, these consequences are difficult to attribute directly to the Act.
However, they are worth mentioning because of their potential impacts.
Increased rents
Landlords may increase rents to offset lost fee income.
After all, they might previously have used other charges to cover some of their own costs.
This increase could even add up to a figure higher than the fees previously brought them, ultimately nullifying the Act’s affordability benefits.
Bribes
Some tenants may offer cash ‘bribes’ to beat competition for properties.
Of course, the Bribery Act 2010 should deter some landlords and tenants from participating in this. However, some may still try.
Poorer services
Some agents may provide a poorer service if they can’t charge repetitive fees.
They are now partially disincentivised from ‘going the extra mile’ in many areas.
