Tenancy Fees Explained

by - 18 February

 *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.
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