What tenant fees are banned?
There is a variety of fees which were previously acceptable which are now banned, including:
· Credit check fees
· Tenant referencing charges
· Expenses relating to property check-in and check-out
· Inventory charges
· Guarantor referencing costs
· Cleaning services
· Gardening services
· Third-party services
· Administrative charges
If a landlord charges any of these fees after the 1st of June, it will be an illegal fee. Landlords have 28 days to return such a fee, and if they fail to do so, they will be in breach of the Act.
There are exemptions where landlords can charge fees
Landlords can charge for holding deposits, security deposits, rent payments and charges relating to a default on the rental agreement.
If the landlord administers and pays utility bills and for telecommunication services, the landlord can pass these costs to the tenant. However, the landlord cannot charge an additional fee on top of the amount they pay to these providers. Landlords have the right to insist tenants use a specific telecommunications provider or utility firm, but letting agents do not.
If the landlord incurs a cost during the tenancy, they can charge this fee to the tenant. As an example, if the tenant lost their keys and the landlord had to replace the keys, the tenant can be charged the cost of repairing the keys. However, landlords are unable to charge an additional fee, only the cost to them. Therefore, landlords are advised to retain receipts for any losses they incur.
If a tenant wishes to leave the rental property before the agreement concluding, the landlord can charge a fee. £50 is the standard fee charged to tenants who request a change in tenancy, but if higher costs are incurred, the landlord can pass on these charges.
If a tenant leaves a property early, the landlord can only charge for lost rent, not rent equating to the remainder of the contract. If a tenant left a property with three months left on the contract, but the property was let again after two months, the landlord could only charge the former tenant two months of rent.
Landlords should be aware they can now no longer charge an initially higher rental fee and then lower the rental fee throughout the tenancy. This change will prevent landlords from recouping lost fees due to the new Act. However, there is always the chance that some landlords will impose higher rental fees to recoup lost income.
Of course, in the long-term, higher rental fees may harm a landlord, and it is likely landlords need to absorb some costs.
If you need assistance in operating your letting business, contact Holmes Estate Agents, and we will be more than happy to assist you.