Tenancy Fees Explained
*This is a paid guest post. You can find the authors info at the bottom of this post.
Most tenancy fees were banned from June 2019. If you’re
unsure on which tenancy fees can still be charged for and which cannot, the
below article will for sure help.
Whether you're renting a property or a landlord, it's
important to be aware of the tenancy fee ban.
Landlords & letting agents
are susceptible to be fined & reprimanded if incorrect fees are applied.
Tenants can be charged unfairly with fees the law no
longer permits.
Tenancy Fees Ban
The tenancy fees ban covers all types of tenancies.
Private tenancies, including assured shorthold tenancies, student housing and
lodger agreements are all part of the ban.
In addition, the tenancy fee ban covers both fees
charged to tenants and their guarantors, if applicable.
Tenancy Fees That Are Still Acceptable
It’s important to know that it’s not a blanket ban on
all tenancy fees. There are still fees that a landlord has the right to charge
tenants (if the tenancy agreement stipulates).
Late rent fees
If you’re 14 days late, you can still be charged a late
payment fee.
Of course, this must be stipulated in your tenancy
agreement.
Landlords can’t just make up late durations and the
consequences.
Tenants should also be aware that they can’t be charged
more than 3% APR above the Bank of England base rate.
Also, if there is a letting agent involved, only the
letting agent or the landlord can charge the late penalty, not both.
Lost Keys
If a tenant loses their keys or fob, landlords can
charge a fee for a replacement.
The charges must be reasonable. So if a tenant is being
charged £100 to replace a set of keys, the door’s open for a complaint (excuse
the pun)!
Early tenancy exit
If there is a fixed term tenancy in place and a tenant
decides to end their tenancy early, an exit fee can still be applied.
This is to cover losses incurred by the landlord and
similar to replacement keys, the charges must be ‘reasonable’.
There are of course exemptions. If a tenant is vacating
property due to breaches in the property upkeep, there is the argument to be
made for the exit fee to be scrapped.
If the tenancy agreement includes a notice period, then
if this notice is given, the tenancy fees may not apply.
Changing or assigning your tenancy
For administration activities related to updating or
changing tenancy agreements (because of the tenant), the landlord can charge
£50.
This will include scenarios such as the tenant wanting
a name change on the agreement etc.
If however there are wider changes that the landlord
feels will exceed £50, as long as a landlord can provide proof, larger fees can
be issued.
Renewing your tenancy
Under the new rules, a tenant can be charged for
renewing a tenancy, if a fixed-term tenancy signed before 1 June 2019
stipulates so.
Outside of this window, tenants can no longer be
charged for renewing an agreement.
Banned tenancy fees
The tenancy fee bans cover categories such as
references, administration (outside of changes requested by the tenant), credit
checks and immigration assessments.
Included are also the more frivolous type of tenancy
fees;
●
Moving in on a weekend charges
●
Fees for pets
●
Inspection fees
●
Fees for smoking
Costs not considered tenancy fees
There are a number of costs not considered tenancy
fees, a tenant can still be expected to cover, subject to the tenancy
agreement. These are costs/charges such as deposits, rent in advance and the
below:
Utilities
Utilities are still costs that tenants may need to be paid
for, if not covered under the rental charges. Gas, electricity and water are
still acceptable charges. However, a tenant cannot be charged more than the supplier has billed for.
Damage
Damages are still acceptable costs to tenants. If there
is damage (outside of wear and tear), then a landlord can still look to recoup
these costs from the tenant.
What does a tenant do if they've been charged incorrectly?
Trading standards at the local council or a letting
agent’s redress scheme is the first port of call for any tenants that have
been charged a banned fee.
The consequences to a landlord or letting agent can be
in the form of fines & compensation.
In extreme/repeat cases, councils can take landlords
and letting agents to court, which could result in bans on renting out
properties.
Tenant fees for agreements before June 2019
If a tenancy agreement was signed before June 2019,
a tenant can still be charged banned referencing, credit or admin fees.
This applies even if an agreement was signed before the
June 2019 and the actual tenancy didn’t start until after this date
How much can a tenant be charged?
Letting agents are now by law expected to publicize
their fees.
The fees must be visible on the agent's website as well
as the office.
This gives agents and landlords the visibility of what
charges can be expected (with & without VAT) as well as exactly what the
charges cover.
So how has the ban on tenancy fees impacted the rental market?
As of October 2019, the cost of renting a room in
The UK is stable, with rents up only 1% compared to the year previous.
Matt Hutchinson, communications director for SpareRoom,
says: “Despite repeated warnings that the tenancy fees ban would drive rents
up, so far that’s not been the case. Even with July, August and September being
the busiest months for new tenancies we haven’t seen a significant bump in
rents. It’s still early days but, for now, tenants will be breathing a sigh of
relief.”
However, there’s still the bigger issue looming over
The UK, you may have heard of it… BREXIT.
It is unknown how the political landscape is impacting
rental costs. Risk-averse landlords may currently be sitting in waiting to see
how the plans unfold.
Rather than rock the boat and increase rents, risking
losing tenants who may look elsewhere, doing nothing right now may be the best course of action.
It will be interesting to see when the number of
unknowns in the country are resolved, how the UK rental market will be impacted
following the tenancy fee bans.
About the author
Raj Dosanjh is a
UK based entrepreneur, founding various businesses including letting agent fee comparison site Rent Round, a martial arts
school and a banking
consultancy.
While you are here why not check out more of my home-related content.
4 comments
This is super informative dear!
ReplyDeleteJessica | notjessfashion.com
I've never really thought about this, so thank you for sharing xo
ReplyDeleteMakeupMuddle.com
Yes tenancy fees are big part of renting a property. Very important info to keep in mind.
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