Sunday, 12 May 2019

Big New Tenancy Laws : Tenants Rejoice, Landlords Weep

01 June 2019 it's happening. The Tenant Fees Act 2019 then comes into force. For all assured shorthold flat and house lettings in England on or after that date, brand new laws will strengthen tenant rights and will make landlords wonder whether they would better off investing in coffee shops or public conveniences. Student lettings and licences are covered too: not social landlord lettings so local authority and housing association lets are out. And as from 01 June 2020, what's banned under new lettings will become banned under lettings before 01 June 2019.

What is banned then?
  • A security deposit (to cover damage to the property or any default in the payment of rent, for example) for more than five weeks' rent or six weeks' rent if you are a Premier  Division footballer and will be paying an annual rent of £50,000 or more. These deposits for assured shorthand tenancies must still be protected with an approved scheme, as at present.
  • A reservation deposit ('We'll hold the place for you but it has attracted an enormous amount of interest and, in fact, I have an appointment with 12 couples this evening, all of whom are bursting to take it.') for more than one week's rent.  But in certain situations the deposit must be returned to the tenant. They generally include where a tenancy agreement is entered into; where no agreement is reached within 14 days; or where the landlord  has asked for a banned fee or wants the tenant to agree to an unreasonable condition.
  • A fee so that you can have the privilege of viewing the property.
  • A tenancy set up fee.
  • An inventory check fee at the start or end of the tenancy.
  • A fee for having to replace a lost key unless it was reasonably incurred and you are shown the relevant invoice.
  • An interest or other charge for the late payment of rent where the rent is less than   a fortnight overdue and, where a fortnight overdue, any interest payment exceeding 3% over base rate is prohibited.
  • A charge for transferring the tenancy at the  tenant's request which is higher than  a reasonable amount but, in any event, no more than £50.
  • Charging the tenant any more than the landlord's actual loss where the tenant wants to go before the end of a fixed tenancy or without giving notice.
  • A fee for professional cleaning of the property at the end of the tenancy (but the tenant can be charged for cleaning which was necessary for breach of a tenancy agreement not to turn the place into rubbish tip).
If an amount over a maximum figure is required then it is the excess that is treated as banned and irrecoverable. So long as the charge is not banned by the new law, a clause in the tenancy agreement which entitles the landlord to be compensated for breach of the tenancy is ok ( for example, having to pay up for damaging the property).

A landlord who breaks the new law can be prosecuted by trading standards or fined up to £30,000. The landlord can appeal against a fine to the first tier tribunal. A tenant whose banned fee or holding deposit has not been returned will be able to get it back either through a trading standards demand of the landlord or the county court, depending on whether or not there has been a prosecution. Trading standards should help.

So long as the landlord has not returned a banned fee or a holding deposit which broke the law, they cannot give the tenant notice they want them out under section 21 of the Housing Act 1988 which is the two month job for assured shorthold agreements.

As for pre-1 June 2019 tenancy agreements, from 01 June 2020, a fee which would be banned for new agreements will then be banned for the old agreements (but not before then). That means the tenant will not be liable to make payment on or after 01 June 2010 but will be entitled to repayment of any banned sum paid over on 0r after 01 June 2020. So the landlord can collect up to 1 June 2020. If they collect after then, the payment is a banned payment and unless the landlord returns it within 28 days they can be dealt with in the same way as post-01 June 2019 landlords. Excessive security deposits and holding deposits are not affected. 

For usch more on landlord and tenant law, indulge yourself in my book Breaking Law.