On June 1st 2019, the Tenants Fees Act came into effect, which is going to have major repercussions for tenants and landlords alike. This actdrastically limits what costs landlords are permitted to pass down to tenants and can result in a £5,000 fine if violated. This act is designed to protect tenants from unfair fees and predatory landlords by making it more affordable to move between rental properties. This came into effect on the 1st of June for new tenants and will be universal on May 31st 2020.
Here’s what you need to know about the new law. The landlord will be financially responsible for paying for the services they contract; all upfront costs (except those we detail below) are now prohibited. This includes administration charges, inventory fees and reference checks. Landlords are still able to charge a deposit (capped at five weeks rent) and a holding fee as well as charge for:
- Lost keys – Though the cost must be deemed reasonable and they should be able to provide a receipt
- Late Rent Repayment Fees- If a tenant is more than two weeks late with a payment, Landlords and letting agents can charge a late rent fee of 3% plus the Bank of England base interest rate. However, they can no longer charge for the costs incurred while chasing a late fee such as letters and admin costs
- Changes Made to the Tenancy Agreement at the Tenant’s Request – Landlords and letting agents can charge £50 if a tenant requests a change to the agreement. If the landlord or letting agent can demonstrate that the costs of making a change to the agreement comes to more than £50, tenants can be charged more. This £50 does not apply to renewals or extensions to the tenancy.
It has been said that Landlords will have to recoup these lost fees from somewhere, which some believe will inevitably lead to higher rents. As a property management company covering many major cities in England (including Manchester and Birmingham), we are concerned about the knock on effects to the people and properties we take care of as we aim to provide top quality block management services.
As block managers we would primarily speak to the leaseholder/owner of the property. However when they are rented out we would speak to the tenants too and often hear their concerns about the rental market.
We understand that there are some landlords that unfortunately take advantage, which is why we always advocate for transparent costs and fees. However, we also know that keeping a property up to specification can be a costly endeavour.
So how does all this affect property management companies? We deliver a valuable property management service and ensure properties are safe, meets statutory requirements and are well managed. We believe that fees should be reasonable and transparent.
We’re passionate about property management and are hopeful this will positively improve the lives of landlords or tenants.
Time will tell how this will affect the rental market.