As we previously reported, since June 1st 2019, landlords and agents are no longer able to charge a number of fees in England for new tenancies signed on or after this date. For tenants who entered into a tenancy before 1 June 2019, a landlord or agent will still be able to charge the now prohibited fees up until 31 May 2020, where these are required under the terms of the tenancy agreement. As reported, the Government has produced detailed guidance on the new legislation for landlords, agents and tenants.

All tenant fees are essentially prohibited unless the payment is expressly permitted under the new legislation. The legislation states that tenants cannot be required to enter into a contract with a third party in connection with a tenancy of housing in England if that contract is a contract for the provision of a service, or insurance (except for utilities or communication services).

This ban on (now) prohibited fees was introduced just a fortnight after I ceased being a tenant, when we moved into rented accommodation for a period of time whilst remedial works were being undertaken at home. It is therefore interesting to note some of the terms of my tenancy that would no longer be lawful had I rented under the new legislation. These include: 

  • The refundable tenancy deposit paid based on 6 weeks’ rent. This is now capped at no more than 5 weeks’ rent where the total annual rent is less than £50,000, or 6 weeks’ rent where the total annual rent is £50,000 or above.
  • The requirement to take out tenants’ insurance for the duration of the tenancy (which amounted to £15 per month). Tenants can no longer be required to enter into a contract for the provision of insurance.
  • The requirement that we pay a professional cleaning company for a professional clean at the end of the tenancy (although we were not tied to using a particular cleaning company). This equated to £208 for 2 hours’ cleaning. Under the new legislation, a landlord or agent may request that the property is cleaned to a professional standard, but cannot require the tenant to enter into a contract for cleaning services with a third party/cleaning company.  
  • Tenant set up fees for credit checks, right to rent checks and referencing (which in our case amounted to £580). A landlord or agent cannot charge a tenant for providing a reference in relation to privately rented housing, or for other set up fees, such as the cost of preparing an inventory, referencing or credit checks.

As demonstrated, the new legislation will have an immediate impact on helping to reduce the cost of renting for tenants. Landlords and agents will need to review their tenancy agreements to ensure they are compliant.

At Markel Law we regularly comment on SME related matters.

Follow this link to find out more about Markel Law and how we can assist your business.