Opal Lettings Guide to Tenant Fees Ban

Opal Lettings Guide to Tenant Fees Ban

Since last Saturday, 1st June, the Tenant Fees Ban has become law.  In most respects it is a good thing, as some Letting Agents and Landlords have been charging inflated prices for credit checks and inventories. And under the new laws, there is also a limit to the amount they can charge for deposit, and late fees.

This new legislation will be mandatory for every shorthold tenancy in the PRS (private rented sector), and all new tenancies concluded after 1st June 2019.  For existing tenancies, these rules will apply as and from 1st  June 2020.

In a nutshell, the only things an agent or landlord can charge for are payments related to utilities and broadband, tenancy deposit, holding deposit, changes to agreement, TV Licence, Council Tax, Loss of Key, and a default fee for late payment.  Here at Opal Lettings, we never did charge for a lot of that, and feel that overall the new rules are quite fair for all concerned, although Landlords and Agents should be able to recoup the actual cost of holding fee that goes south, and referencing and admin.

So the ten main stipulations of these new laws are:

  • Agents and Landlords will not be able to charge prospective tenants for viewings.
  • They will not be allowed to charge for admin – referencing, financial checks, admin and guarantors will have to be paid by the Landlord.  Renewal fees will have to be paid for by tenant for tenancies that started before 1 June 2019.
  • They will be able to charge tenants for end of tenancy clean or check out fees, providing the tenancy agreement was agreed before 1 June 2019.  Otherwise professional end of tenancy cleans will not be charged to the tenant except in extreme (including evidence) situations. 

That’s going to open up a whole can of worms straight away!

  •  Agents will not longer be able to charge for expenses they incur using third parties, e.g. referencing or credit check agencies, gardening services or guarantor requests.  Any of these services would have to be paid by Landlord.
  • There won’t be any changes to the day, time, method of monthly/weekly rent payments.
  • Deposits will be capped – Agents and Landlords will only be able to charge a maximum of 5 weeks rent, or if the annual rent of the property exceeds £50,000, 6 weeks rent.
  • Holding fees will be limited to the equivalent of one weeks rent, and Agents will not be able to continue advertising a property if a tenant has reserved it with a holding fee.  The fee needs to be repaid when tenancy is confirmed or after 15 days if agreement doesn’t go through.

Not very fair, if tenant mucks Agent/Landlord about and withdraws for no reason.

  •  Amendment to contract fee is capped at £50.00.  If it costs Agent more than £50.00 to do this, they will have to provide proof.
  • Tenant leaving before end of contract charges will be reduced, to the amount they would have had to pay until the end of the tenancy, no extra fees allowed!
  • Late payments will also be restricted. This applies to rent more than 14 days overdue, and it must be written into the contract from the get go.  The charge for late payment is not to exceed 3% more than the Bank of England’s annual percentage rate (0.75% at time of writing) for each day the payment is owed.

 So in conclusion, at Opal Lettings we welcome most of these changes as it presents a level playing field for all, but we do believe expenses incurred should be recouped.  For example, if a tenant pays a holding fee, and an agent is not allowed to continue advertising, and tenant decides after a couple of weeks not to proceed with the tenancy, agent should be able to keep the holding fee.