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New laws now ban Landlords and Letting Agents from making some charges and cap the amount of other charges. 

The Government has been striving for some time to put tenants in the private sector on a better footing with the aim of ensuring landlords provide more affordable homes with no hidden costs to tenants, prospective tenants and guarantors.  As of 1 June 2019 letting fees are prohibited, the amounts of deposits and holding deposits are restricted and charges during a tenancy must be fair. 

The new law brings England in line with the Scottish model where letting fees were banned several years ago.  Similar laws will apply in Wales later this year.

The new law applies to most Assured Shorthold Tenancies (excluding social housing), some student lets and licences to occupy (excluding holiday lets and, again, social housing).  It applies to all such tenancies entered into on or after 1 June 2019 and by 1 June 2020 it will apply to all such tenancies whenever they were entered into.

So tenants can no longer be charged, for example, for administration fees, credit checks, for a guarantor or an end of tenancy checkout. 

The Act sets out permitted payments which landlords and agents can ask tenants to pay and if it is not on that list it is a prohibited payment, meaning that the Landlord cannot end the tenancy with a Section 21 (no fault) Notice until the money has been repaid to the tenant.  The permitted payments are:

Rent – although Landlords cannot, for example, front-load the first months’ rent to offset their costs of setting up the tenancy;

Deposit – capped at 5 weeks’ rent in most cases;

Holding deposit – capped at one weeks’ rent;

Payment of charges – the amounts are capped. 

Early termination of tenancies – when requested by the tenant/s;

Payments for Council Tax and utilities – subject to conditions.

Some arrangements have also been singled out as prohibited and the main ones are requiring a tenant to:-

Enter into a contract with third parties for the provision of a service or a contract of insurance;

Make a loan to any person.

These new laws will be enforced by Trading Standards Authorities or District Councils.  A first offence will attract a civil penalty of up to £5,000 but a second breach within five years will be a criminal offence and the authorities can elect to either prosecute or impose a fine up to £30,000.  Appeals can be made to the First Tier Tribunal.  Ultimately a landlord or agent could be banned from carrying on their business. 

So landlords need to take great care what they are charging for and chose carefully their letting agents.

This Blog is written to raise awareness of these issues. While every effort has been made to ensure that it is correct at the time of first publication it may not be updated, even if the law changes. It is not intended to be specific legal advice and cannot be relied on as such. Chattertons are not responsible or liable for any action taken or not taken as a result of this Blog. If you think any of these matters affect you then we would be happy to advise.

Andrew Morley provides dispute resolution and residential landlord and tenant services from our Lincoln office.