How does the Tenant Fees Act impact tenants?

The Government says the legislation was implemented with tenants in mind, aiming to protect you from "unfair fees" and make it more affordable to move between rental properties.

We answer some of the questions you might have about the Tenant Fees Act and how it might impact you as a tenant. 

This will depend on where you live and the type of tenancy agreement you have in place.

The Act is in force in England and applies to all Assured Shorthold Tenancies (which is the most common type of tenancy), licenses (which include lodgers) and student lettings. If you’re under a contractual letting, such as a company let, the rules set out in the Tenant Fees Act may not apply to your agreement. 

The Tenant Fees Act took effect for all designated new tenancies and renewals from June 1st 2019. Originally, if your tenancy was granted before this date, you could still be charged fees in accordance with your Tenancy Agreement until May 31st 2020.

Since that date has now passed, landlords and agents can't enforce these fees even if your tenancy began before June 1st 2019. 

All upfront fees, except those exempt by law (we cover those below), can no longer be charged to renters by landlords or letting agents; this includes payments to third parties. As a tenant, some of the costs you could have been liable for but can no longer be charged include administration charges, referencing checks or inventory fees. 

Alongside rent, security deposits and holding deposits, there are three fees which are exempt from the Tenant Fees Act, which tenants can still be charged. If landlords or agents want to be able to charge you these default fees, they must be included in your Tenancy Agreement.

1.   Losing your keys

If you lose your keys, your landlord can still charge you to replace them. However, the cost must be for a 'reasonable amount', and whoever is charging the fee must be able to provide a receipt for the costs incurred.

2.   Late rent payment fees

If your rent is late by over two weeks, your landlord or their letting agent can charge you a late rent fee. This fee can be charged at 3% plus the Bank of England base interest rate.

There is a change, however, which means that you can only be charged the late rent fee, and landlords will no longer be able to charge you for the costs incurred by chasing late rent, such as letters and the administration costs.

 3.   Changes made to the Tenancy Agreement at your request

If you request a change to the terms of your Tenancy Agreement, then you’re liable for a fee of up to £50 or reasonable costs incurred if it’s higher. Your landlord or letting agent would need to demonstrate that their costs in making changes to the Tenancy Agreement cost more than £50, then they could, in theory, charge you more. You cannot be charged if you’re renewing your tenancy or making it longer. 

If you’re charged for a fee which you don't think is legal, you should first bring your concerns to the attention of landlord or the letting agent. Professional letting agents managing properties will be aware of the legislation; if there’s been a legitimate mistake, they could rescind the charge or be able to show you why they’re entitled to charge you a fee in this instance, for example, if it’s a fee for losing the keys to the property.

One of the many benefits of having a letting agent managing the property is a clear route of communication. Professional letting agents will also be members of a Government approved redress scheme; if a letting agent manages the property, there are two redress schemes The Property Ombudsman (TPO) and The Property Redress Scheme. You can only complain to a redress scheme if you're unhappy with the final response from the letting agent or if eight weeks have passed since your initial complaint and the issue is unresolved.

The key is communication; it’s important to talk to your landlord or letting agent if you’re unsure about the cost associated with your rented property. If communication with the landlord or letting agent doesn't clear things up, you could contact a charity such as Citizens Advice to ask for their guidance.

Whilst the Government aims to reduce the costs tenants face, landlords and letting agents still need to cover the costs incurred when setting up a tenancy. With landlords already feeling the impact of taxation changes, the expectation is that costs may be passed back to tenants through higher rents, particularly for new tenancies. Landlords’ ability to increase rents will largely be determined by local market dynamics of supply and demand for property.

The HomeLet Rental Index tracks average rental values of new tenancies in the UK, and recently we've seen some indications of rents increasing at a slightly higher rate. 

No, landlords and agents are not allowed to do this under the rules set out in the Tenant Fees Act. They cannot charge you an increased rent at the beginning of a tenancy and then reduce it thereafter. For example, charging £900 for the first month’s rent and then reducing the figure to rent of £700 from month two onwards. 

The view from some tenants, certain consumer groups and charities (such as Shelter and Citizens Advice), was that fees charged by some landlords and letting agents were excessive.

The Ministry of Housing, Communities and Local Government says the Tenant Fees Act "represents a move to rebalance the relationship between tenants and landlords to deliver a fairer, good quality and more affordable private rented sector". It says that "the system will also be clearer and less complicated for renters, allowing you to see how much a property is going to cost you with no hidden charges".

You can view the documents related to the Tenant Fees Act, which sets out the Government’s approach to banning letting fees paid by tenants in the private rented sector on the Gov.uk site; this includes a document on 'guidance for tenants'. 

The Tenant Fees Act is only effective in England. Letting agent fees have been banned in Scotland since 2012. In Wales, a similar initiative, ‘The Renting Homes (Fees etc.) (Wales) Bill’, was introduced on September 1st 2019 and includes a similar range of measures related to banning upfront fees and capping deposits.

A range of legislative changes have been introduced to the private rented sector over the past few years; as a tenant, when you’re applying for a property, going through a reputable letting agent can really help to ensure the tenancy runs smoothly.

The private rented sector is now home to around 5 million households in England, the Tenant Fees Act is a significant legislative change for the market and only time will tell what the long term impact is.