The Tenant Fee Ban

It has been over two years since the Chancellor announced that certain fees applicable to tenants would be banned. This tenant fee ban was announced as part of the Autumn Statement. When the announcement was made, there was a big concern that tenants were being over-charged by landlords and letting agents when it comes to the process of setting up a tenancy. A lot of people believed that this was making it too expensive for people to enter the market for privately rented accommodation.

Needless to say, those involved in the industry know that there are a lot of hurdles and complexities when it comes to locating the right tenant and then drawing up all of the legal agreements that are required to protect both parties. This is without mentioning safeguarding all of our landlords against the risks of penalties for making a simple error.

Tenant fees that have been banned

Despite this, the reality of the situation is that the majority of fees that are charged to tenants are now banned. This has been the case since the beginning of the month. The rules are the same, though, no matter you use a letting agent or you manage the property and let it out yourself.

So, let’s take a look at what you can and cannot charge tenants for. You are not allowed to charge tenants for the following:

  • Cleaning or gardening costs
  • A fee to complete the inventory
  • Any default payments not detailed in the tenancy agreement
  • Any deposit that is more than five weeks worth of rent
  • Costs to complete the reference, including if the tenant requires a guarantor

There are also a number of costs that are allowable. This includes the following:

  • Reasonable fees in the event the tenant wants to end a tenancy early
  • Reasonable fees for making tenancy agreement amendments
  • Default payments, as long as they have been detailed in the tenancy agreement
  • A deposit up to five weeks of rent
  • Rent
  • Holding deposit of up to one week’s rent

Deposit changes

It is also important to note that there has now been a significant change with regards to the amount of deposit that a landlord can take as well. This has now been capped at a maximum of five weeks of rent.

Nevertheless, when you consider the fact that all deposits need to be held in a scheme that has been approved by the government in the UK, this does not really have a big impact on landlords at the beginning of a tenancy.

However, it does mean that they have lower protection against any tenants that default. This is because this means that a rogue tenant does not have much incentive to pay their final month’s rent if they have made damage to the property, as they know their deposit is only a little bit more than this. This can mean that a landlord would end up out of pocket.

Assured Shorthold Tenancies are impacted by these changes, and this is the most popular type of tenancy in the UK.

We hope this blog post has helped to give you some clarity regarding the recent changes in the letting sector in the UK.

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