The Tenant Fees Act 2019 (‘the Act’) came into force on 1 June 2019 and applies to three main criteria “in connection with a tenancy of housing in England”.
- Controlling the kind of payments that landlords and letting agents can require
- Restricting certain third party arrangements
- Setting out strict regulations for the treatment of holding deposits
Tenancies to which the Act applies:
The Act applies to tenancies of housing in England. For the purposes of the Act ‘tenancy’ means:
- Assured Shorthold Tenancies (other than social housing and certain long leases)
- Student Lettings (falling within paragraph 8 of Schedule 1 of the Housing Act 1988 )
- Licences to Occupy (excluding holiday lets and licences to occupy social housing)
- Prohibited Payments
The starting point is to understand that all payments are likely to be prohibited unless the payment is expressly permitted under the Act.
The only permitted payments are as follows:
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| Judith Fitton | Poppy Jackson |
| Partner | Trainee Solicitor |
| Tel: 01483 451 900 | Tel: 01483 451 900 |
| Email: judith.fitton@gordonsols.co.uk | Email: poppy@gordonsols.co.uk |
- Prohibited Arrangements
The Act prohibits landlords and letting agents from requiring a tenant (or guarantor) to:
- Enter into a contract with a third party in connection with housing in England, if that contract is a contract for a provision of a service, or a contract of insurance. There is an exception in relation to the provision of utilities and communication services to tenants.
- Make a loan in connection with the tenancy.
- Holding Deposits
Schedule 2 of the Act sets out a timetable for dealing with holding deposits and restricts the treatment of holding deposits.
Only one holding deposit may be held at any one time for the same letting unit, so taking multiple holding deposits from multiple prospective tenants is not allowed. However, if a holding deposit has been repaid to a previous tenant, or the landlord is entitled to retain a holding deposit (e.g. due to a tenancy not being granted following misleading information given by the tenant) the landlord or agent can then take a further holding deposit from another prospective tenant.
From the time a holding deposit is received by a landlord or letting agent, there is a deadline for agreement which is 15 days from that date.
The holding deposit must be repaid:
- If the landlord and tenant enter into a tenancy agreement, it must be repaid to the tenant within 7 days from the date of the tenancy agreement.
- If the landlord decides before the deadline for agreement to not to enter into a tenancy agreement, it must be repaid to the tenant within 7 days of the decision.
- If the landlord and tenant fail to enter into a tenancy agreement before the deadline, it must be repaid to the tenant within 7 days from the deadline for agreement date.
Transition period
Subject to a one year transition, the prohibitions relating to landlords do not apply to a requirement imposed before 1 June 2019 or a requirement imposed by or pursuant to a tenancy agreement entered into before 1 June 2019.
Any term that requires a prohibited payment after 1 June 2020 ceases to be binding and any prohibited payment received must be repaid within 28 days.
Enforcement and Penalties
The new provisions will be enforceable by local weights and measures authorities (i.e. Trading Standards) and district councils that are not local weights and measures authorities.
The penalty for a first offence is up to £5,000. If a person commits a second offence within 5 years, a penalty of up to £30,000 is payable. A second offence is also a criminal offence. All prohibited payments will be required to be repaid on top of the financial penalties. Further details on enforcement and penalties can be found here.
If you require any further advice on The Tenant Fees Act 2019 please contact our residential conveyancing team on 01483 451 900 or make an online enquiry here .