What Charges Still Apply To UK Tenants?
As a tenant you should be aware of the charges you can be expected to pay, but more importantly, what you cannot be charged for.
On the 1 June 2019 the Tenant Fee Act 2019 was introduced in England and applies to all new tenancies granted from that date onwards. This has now been in place for a few months but there is still some confusion regarding what this means for tenants and landlords. If you are one of the people that this affects and you’re not sure what it means for you, then we are here to shed some light on the dark subject of letting agents’ charges.
WHO DOES THE ACT APPLY TO?
The Tenant Act 2019 applies to the following tenancies:
- assured shorthold tenancies
- student lettings (provided by a specified educational institution)
WHAT CHARGES ARE AFFECTED BY THE ACT?
Landlords and letting agents can still ask for a holding deposit. This holding deposit is to essentially reserve a rental prior to the necessary checks being made. However, this deposit is a fully refundable charge providing you, the tenant, do not:
- Fail the Right to Rent checks
- Use false or misleading information on your tenancy application
- Delay the contract being signed (must be completed within 15 days of landlord/agent receiving the holding deposit)
Holding deposits are now capped at a maximum of one week’s rent. If a letting agent or landlord tries to demand more from you, then you should be questioning why. Not only should you be questioning why, you should refuse to provide more than a week.
Like holding deposits, tenancy deposits still apply under these new rules, but there is now a cap on what can be claimed.
Landlords and letting agents can no longer ask tenants for more than a weeks rent deposit if their annual rent is less than £50,000. If the rent is over £50,000, the maximum they can request is six weeks’ rent.
This deposit, exactly like the holding deposit, is also fully refundable, so long as the tenant does not contravene their tenancy agreement. This means not damaging anything and complying with the tenancy agreement. A compliant tenant should expect to receive their deposit back in full within 10 days of the end of the tenancy agreement, providing there is no dispute.
Late rent (default) fees
A fee can be charged by letting agents and landlords to tenants who have not paid their rent for 14 days or more past the due date (this can be found in your tenancy agreement if you are unsure). Under the new legislation, any letting agent or landlord who tries to charge for late payment before a fortnight has passed is acting unlawfully.
It is very likely that as soon as 15 days has passed, they will charge you for late payment. Make sure you are aware when you must be paying your rent by to prevent any late rent charges.
The fee charged for late payments can vary and is likely to be included in your tenancy agreement. However, it must not exceed 3% of the Bank of England’s base rate for every day the rent remains unpaid. Once again, large, daunting fees for late payment should set alarm bells ringing as it’s likely that your landlord or letting agent is not following the new guidelines.
For example, if a rent of £850.00 was due on 1 June 2019 and if the Bank of England Base Rate is 0.75% on 15 June 2019, an annual percentage rate of 3.75% can be added for each day it remains unpaid. This figure will be rounded up to the nearest decimal point. In this example, the interest can be applied back to 2 June 2019 (but only if payment has not been made before 15 June 2019). Anything above would be a prohibited payment.
Only the landlord or the letting agent can request the interest payment. If the landlord requests payment and the letting agent subsequently requests the interest payment, the letting agent is deemed to have requested a prohibited payment. The same goes the other way round (so if a letting agent has already requested and then the landlord subsequently requests an interest payment, the landlord has requested a prohibited payment). As a tenant you cannot be asked to make the interest payment twice.
Early tenancy termination
Ending your tenancy early will likely land you with a fee and this can still vary greatly. Do not be surprised if you are asked to stump up any rent that is currently outstanding and a fee from the letting agent on top. Please check your tenancy agreement carefully regarding what happens if the tenancy is terminated early. The amount payable will depend on the letting agent and this is not currently covered by any of the new changes. This means there is no maximum fee that they can charge you.
Tenancy agreement changes
There are administrative costs to cover when changes to a legal document such as a tenancy agreement are made, but the changes that have been introduced aims to make this much fairer to tenants by capping the amount charged.
Prior to 1st June 2019, it was quite common for tenants to incur huge fees for what amounted to little more than amending a few minor details, but that is now a thing of the past. The new changes cap this charge at a maximum of £50 including VAT for most changes but letting agents and landlords can charge more should their costs run considerably higher.
If you are liable for an additional charge, such as replacement keys or having new locks fitted to the property, under the new rules these charges must be “reasonable”. This change means letting agents are no longer able to charge over the odds.
Tenants will be within their rights to ask for proof of the amounts paid to conduct the work or provide a replacement. This will show that the costs should be “reasonable” and prevent letting agents from overcharging for work that is done.
A payment for the provision of a utility is a permitted payment if the tenancy agreement requires the payment to be made and “utility” means electricity, gas, other fuel water, or sewerage.
There appears to be no reason why a landlord or letting agent cannot receive payment directly for a utility.
The re-sale of gas and electricity is already governed by legislation (it can only be re-sold for the same price it cost).
Many of the main property portals will provide details of an area’s average rent and what you can expect to pay for the services required to run the home – things such as utilities, TV charges, broadband, etc.
Once you have both figures, simply add them together to get a rough idea of what a rental with bills paid should cost in order to make a general comparison when searching for your next home. Anything way above this average figure could be the result of a rogue landlord trying to recoup losses from the 1 June 2019.
If you think your landlord is overcharging you, or that the tenancy agreement looks unreasonable, get legal advice before you agree to anything, or, more importantly, pay anything!
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.