Tenant fee ban and how this will impact landlords

On 1 June 2019 the Tenant Fee Act (2019) will come into force. While some landlords seem oblivious to the repercussions of the act, it will have a major impact upon the way in which landlords find and manage their tenants. The idea is to make the industry as transparent as possible and limit the fees and charges which landlords can pass on to their tenants. There is obviously mixed opinion as to whether the act is “fair” with landlords highlighting the time, effort and expense it can take to change tenants. Tenants on the other hand argue that they should not be made to reimburse voluntary fees paid by landlords to various parties.

Summary of financials

Under the terms of the Tenant Fees Act the following limitations and fines will come into force:-

• Landlords will only be able to hold up to 5 weeks rent as a tenancy deposit
• The holding deposit, to ensure the tenant application, can be no more than one weeks rent
• All other payments will be banned with the exception of contractual default penalties

Strict fee limitations

When the new act comes into force this will mean that landlords/agents can no longer charge tenants for an array of historically common fees including:-

• Referencing of the tenant
• Inventory check
• Admin fees
• Check in fees

As we touched on above, there are two specific exceptions to the rule which are:-

1. Late rent payment fees

Under the new act, landlords will be able to charge a late rent fee for payments more than two weeks overdue. The fees can be charged at an additional 3% plus the Bank of England base rate at the time but this must be charged on a pro rata basis.

2. Loss of keys/security pass

In the past many landlords have charged above and beyond the market rate for key/security pass replacements. Under the new legislation the landlord will be to charge £5 to replace a lost key but they must retain a receipt as evidence.

Even though these two specific charges have been highlighted in the new legislation, they will still need to be written into the tenancy agreement. This is why landlords should take legal advice regarding their tenancy arrangements especially in light of the ongoing changes to the regulatory environment.

Returning holding deposits

In the event that a tenant is successful in securing a tenancy arrangement with a landlord, they are now legally obliged to return the holding deposit. Alternatively, it can be put towards the initial rental fee, or the security deposit, but only by prior arrangement between the parties. There are some exceptions when the landlord can retain the deposit, which include:-

• If the tenant decides to withdraw their application
• The tenancy is agreed but the tenant does not take all reasonable steps to complete the paperwork
• Right to rent checks show that the tenant is not eligible
• The tenant provides misleading information during the original application

It is now law that where the landlord is obliged to repay the holding deposit they will have 15 days in which to act (unless another deadline has been agreed between both parties). Once the deadline has passed the tenant must have received the funds within seven days or have evidence they have been apportioned to future rent or security deposit charges.

Large fines

Landlords/agents who fail to abide by the new fee regulations face potentially huge fines. Their first offence will be treated as a civil offence with a set fine of £5000. If the same offence is repeated within the next five years this will be classified as a criminal offence and the appropriate action taken. Alternatively, for repeat offenders the authorities may agree to a fine of £30,000 payable by the landlord/agent.

Where tenants are forced to defend themselves in court due to the actions of their landlord, tenants will be able to recoup their legal fees from their landlord.


There is no doubt that the noose is tightening with regards to buy to let investors and private landlords. That said there are still attractive opportunities for those willing to take on the growing bureaucracy and look longer term. History shows that private rental markets will eventually come to appreciate any changes and adapt accordingly. This act, deemed unfair by many people, is no different to those in the past.

Discuss the pros and cons of the act in the forum:-


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