Advice

Changes to Agency fees

Landlords can't charge tenants for these things when new law comes into effect this weekend

Landlords and their agents will no longer be able to charge the fees for tenancies signed on or after 1 June 2019

So, what exactly is changing?

Moneysaving expert writes that tenants can be charged admin fees – such as tenancy renewal fees, referencing fees and credit check fees – by landlords and letting agents. According to Citizens Advice, the average amount paid is £400.

But landlords and their agents will no longer be able to charge the fees for tenancies signed on or after 1 June.

Any costs will now need to be met by the landlord – and some have warned landlords may up their rents to recover these costs as a result.

From 1 June, the only costs landlords and agents will be able to charge tenants for will be:

  • Rent.
  • Utilities and council tax   if included within the tenancy.
  • A refundable deposit,   capped at six weeks' rent. The cap could be five weeks' rent for properties where the annual rent is less than £50,000, under an amendment put forward in the House of Lords.
  • A refundable holding deposit to reserve the property,   capped at one week's rent.
  • Changes to the tenancy requested by the tenant,   capped at £50 (or "reasonable costs").
  • Early termination of the tenancy requested by the tenant.
  • Defaults by the tenant,   such as fines for late rent payments or lost keys. These must be "reasonable costs", with evidence given in writing by the landlord or agent.

Any other fees will be banned, and landlords or agents found charging the fees could be fined £5,000 for a first offence. If they break the rules again within five years, they could be given an unlimited fine.

Is this good news?

 Richard Lambert, CEO of the National Landlord Association, says: “Tenants are at risk of losing out on the chance to find a home because letting agents are doing everything they can to minimise workloads to cut down on costs.

“While landlords who self-manage their portfolios will be covering many increased in costs, letting agents are looking at any way they can limit what they have to do on behalf of tenants, now that the costs cannot be directly recovered.

“The smooth running of the housing market requires a little give-and-take, and unfortunately the reaction of some letting agents to the ban on most charges looks set to throw-up more barriers to moving from one tenancy to another.

“Just like private landlords, letting agency businesses are being put under increasing pressure by government regulation. However, they must realise that penalising outgoing tenants by refusing to provide references will ultimately cost them more than just the price of a reference as landlords opt to do without agents’ altogether."

What if my tenant breaches this?

They will be fined. The fine for breaching the Tenant Fees Act will be a civil offence, with a fine of up to £5,000.

However, if a landlord makes another breach within five years of the first fine, then the breach will be classed as a criminal offence instead.

If you commit a criminal offence, you could face prosecution or a fine of up to £30,000.

Last updated July 2020