Ban on Letting Fees - Renewal Fees Loopholes
The key issue here is should you rely on what shall be considered unfair terms for new Tenancies from 1st June 2019 or terms in a contract after 31st May 2020 you could face a hefty fine (first offence up to £5K next one £30K)
Should one not comply with the very
strict rules this legislation imposes then one maybe prohibited from using the Section 21 Notice to evict a problem tenant - so the financial consequence could be severe
You can charge exisiting tenant fees such as checkout fees up to 31 May 2020 but not thereafter
The following Section covers
- The specific components on Periodic Tenancies and the ability to
continue relying on clauses that are contrary to the Legislation as from
1st June 2019 [this is called the transition period] - However, if the tenancy was entered
into before 1 June 2019 and it was agreed in their contract to pay
certain renewal fees, then a landlord or agent can charge these fees for
a new fixed-term agreement or statutory periodic agreement up until 31
May 2020.
- Deposits Exceeding the maximum limit - If a tenant paid a tenancy deposit which exceeds the cap before 1 June 2019, there is no need to refund the excess ammount provided the tenancy is continuing or is a statutory periodic agreement) then the tenant will be bound by the terms of that contract until it is either renewed or terminated.
You are permitted to ask a tenant to pay:
e) Please note: the provisions on a change to the tenancy does not apply to a renewal or to the length of the tenancy. From 1 June 2019, agents and landlords will not be able to charge for a renewal of a tenancy under the Act. However, if the tenancy was entered into before 1 June 2019 and it was agreed in their contract to pay certain renewal fees, then a landlord or agent can charge these fees for a new fixed-term agreement or statutory periodic agreement up until 31 May 2020.
TENANCY SET-UP FEES
No. After the ban comes into force you cannot charge a tenant for any activity (except if it is listed in the permitted payments section above) or for your time in setting up a new tenancy. It is a landlord’s responsibility to pay for services they contract, including any costs associated with setting up a tenancy. This includes fees for referencing and credit checks, guarantor fees and administration. However, if the tenancy was entered into before 1 June 2019 and the tenant agreed in their contract to pay certain renewal fees, then you can charge these fees for a new fixed-term agreement or statutory periodic agreement up until 31 May 2020.From1 June 2020, the term requiring that payment will no longer be binding on the tenant. Until that time, you should consider whether it is necessary to charge in such instances. Where fees are charged, businesses such as letting agents are prohibited from setting unfair terms or fees under existing consumer protection legislation.