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As tenant fees ban goes live in full today, agents warned over advance fees

Full force of fees ban went live this morning and now covers existing as well as new and renewed rental tenancies and, therefore, once legal but now prohibited fees must be returned to tenants.

Nigel Lewis

tenant fees ban

ARLA Property has today reminded letting agents across England that the full tenant fees ban came into force this morning and now covers all kinds of tenancies.

Now, the Tenant Fees Act applies not only to most kinds of new and renewed tenancies but also existing ones, regardless of when they started.

“I think some agents will need a nudge to remind them that, in particular, they must examine their records to ensure they have not charged any advance check-out fees or any other advance fees in the past however long ago the money was taken,” says ARLA Chief Executive David Cox.

“Agents have to remember that any fees taken in advance previously – and entirely lawfully at the time – have now become prohibited payments this morning, and have to be returned.”

Cox reminds agents that although advance fees must be returned, rental deposits of more than five weeks’ rent can be kept until the end of the tenancy, even if an AST becomes a statutory periodic or a contractual periodic tenancy.

David Cox“That, for the purposes of the tenant fees ban, is a continuation of an existing tenancy,” say Cox (left).

He says ARLA has been asking landlords and letting agents to consider transferring tenants with ASTs to these two types of periodic tenancy if they have tenants with pets who have paid a larger deposit because they have a cat or dog.

“If they subsequently start these tenants on a new AST or renew an existing one, the deposit will be restricted to five weeks’ rent and anything more than that returned to the tenant,” says Cox.

Steve Harriott, Chief Executive of the Tenancy Deposit Scheme (TDS), says: “Today is an important date in the calendar for landlords and letting agents in England, as it means that the Tenant Fees Act is fully in force and the transitional period has ended.

“The implication for TDS is that we should no longer see deposit disputes where landlords or letting agents seek to make claims for things like unpaid check-in or check-out fees.”

Legal expert comment

Neli Borisova tenant fees ban“The Act is not very well-worded and the guidance issued by the MHCLG is unclear in several areas. For example, it is illogical to prohibit landlords and tenants reasonably pre-agreeing  the cost of an end of tenancy clean, which gives tenants a clear understanding of their liabilities,” says Neli Borisova (let), a solicitor in the commercial litigation team at law firm JMW,

“The need to justify cleaning costs in each case potentially creates a further point for dispute between landlords and tenants.

“The widening of the Act will inevitably add pressure to landlords and letting agents who are already facing significant financial challenge due to coronavirus. Businesses are having to adapt at speed on many fronts. It is also unlikely that the changes required by the Act are on landlords’ and agents’ radars at the moment.

“Smaller agents will undoubtedly struggle the most as tenants’ fees represent a significant part of their income and many of them, just like other smaller businesses, may already be on the brink of closing down.”

Read more about the fees ban.

June 1, 2020

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