England letting fees banned and how this may affect you

If you’ve heard about the recent change in legislation regarding letting fees, you may be interested to know a little more on what this means to landlords, their agents and to tenants.

June 1st saw a significant change to the way in which landlords and their agents in England work; they are no longer allowed to charge tenants letting fees on new contracts signed on or after that date.

It is no longer OK to charge those taking out a new tenancy certain fees, including tenancy set up and check out fees, referencing fees and credit check fees.

Taking things one step further, if you are a tenant and you renew a pre-existing tenancy agreement after June 1st, you could potentially claim back some of your deposit.

Of course, this is a game changer for anyone involved in lettings.

From the 1st June, the only costs landlords and agents can charge for are:  
•    The rent itself
•    Utilities and council tax (that are included within the tenancy)
•    A refundable deposit which is capped at five weeks’ rent if your annual rent is below £50,000; or six weeks’ rent if annual rent is higher than this.
•    A refundable holding deposit to reserve the property which is capped at one week’s rent
•    Variations to the tenancy requested by the renter
•    Defaults by the tenant; for example, fines for not keeping up with rent payments or for lost keys. Lost key fines are required to be “reasonable” with written evidence from the landlord or agent

Late rent payment fines are capped at an APR of 3% above the Bank of England base rate and are determined based on the days the amount has been outstanding. These fines can only be charged when a payment has been outstanding for 14 days.

No other fees can be charged.

So, what does this mean for landlords and agents?

For anyone who charges other fees, they could face a £5,000 fine for a first offence; and an unlimited fine should they contravene the new ruling again within a five-year period.

And for tenants?

If you entered into a tenancy agreement prior to 1st June and your agreement includes additional fees, you will be required to pay these up until 31st May 2020. From 1st June 2020, you will no longer be bound to pay these.

If you are renewing a tenancy from 1st June this year onwards and you originally paid a deposit that’s greater than five weeks’ rent (or six weeks’ rent if the annual rent is more than £50,000), then you should be entitled to a partial refund.  

A refundable deposit which is capped at five weeks’ rent if your annual rent is below £50,000; or six weeks’ rent if annual rent is higher than this.

Scotland, Wales and Northern Ireland

Scotland has already banned further letting fees.

Wales is set to ban them from September 2019.

In Northern Ireland, the fees are still legal.

More information

It’s knowing this news and exactly what it means that makes us a great port of call. Why not get in touch so we can chat through your own set of circumstances together?