Can Land Lord Charge A Service Fee

16 June 2020

Tenant Fees Act 2019: What can landlords charge tenants for?

The Tenant Fees Act 2019 came into forcefulness on 1 June 2019 and applies to all relevant tenancies from one June 2020. The Act prohibits landlords (and managing agents) from charging fees (prohibited payments) to tenants and if landlords do not comply, they may confront difficulties recovering possession from tenants and/or confront a fine.

What types of tenancies does the Deed apply to?

The Human activity applies to assured shorthold tenancies, a licence to occupy and tenancies of student accommodation.

From 1 June 2020 the Act applies to all relevant tenancies (even those entered into earlier 1 June 2019, which it initially covered when first introduced concluding year).

What are prohibited payments?

In summary, landlords cannot recover the following from tenants:

Viewing fees
Tenancy set up fees
Tenancy check-out fees (including requiring the tenant to pay for a cleaning service)
Third party fees (such as a third political party reference check fees, inventory fees).

What types of payments can a landlord accuse?

In summary, landlords are permitted to charge their tenants the post-obit fees:

Rent
A tenancy deposit (up to a maximum of five weeks' hire, or six weeks' hire if the annual rent is £50,000 or more)
A belongings deposit to reserve a property (up to a maximum of one week's hire)
A payment to alter the terms of the tenancy (for example, permission to sub-let) generally upwards to £fifty
A payment on early termination of the tenancy
Payment of utilities, broadband, Television receiver, phone and council tax (provided tenants are not overcharged)
A default fee for late payment of rent or where a tenant has lost their keys
Amercement where a tenant has breached the terms of the tenancy.

What happens if a relevant tenancy expressly permits a prohibited payment?

If a relevant tenancy contains a provision permitting a landlord to recover a prohibited payment, that provision no longer has any consequence.

If a tenant does make a prohibited payment, for whatever reason, the landlord should return it inside 28 days.

What are the consequences for breaching the Deed?

Trading standards officers, local councils and tenants can enforce the Act.

A breach of the Act will tend to be considered a civil breach, with landlords facing a fine of upwardly to £5,000 per alienation (if existence fined for multiple breaches at once). If landlords commit a further breach within 5 years, this will be a criminal offence, and landlords could confront an unlimited fine. Where an offence is committed, local authorities may impose a fine of up to £30,000 every bit an alternative to prosecution.

A tenant is also entitled to be refunded the prohibited payment, together with an interest (if awarded).

Can accepting a prohibited payment restrict a landlord's ability to recover possession?

Yes. A landlord is prevented from serving a section 21 notice if they are in breach of the Act.

If a landlord wants to serve a section 21 detect, the prohibited payment must be returned to the tenant before the section 21 notice is served.

Practical points

Landlords should review all relevant tenancy agreements to ensure that no prohibited payments have been demanded or accustomed;
If a relevant tenancy does comprise a prohibited payment, it would exist sensible for landlords to make a note that this provision is unenforceable (and potentially even cantankerous it out), to limit the risk that a prohibited payment is accidentally demanded and accepted.
If a prohibited payment has been accepted, this should be returned immediately.

If you desire to discuss any of the points raised in this article, delight contact Kate Hallifax in the Existent Estate Dispute Resolution Team at [email protected] or on 07715 060 306.