As discussed in the last blog, The Tenant Fees Act comes into force from 1 June 2019. This will make it illegal for landlords and letting agents to charge certain fees in connection with a tenancy.
The only payments that can be charged are rent, a refundable tenancy deposit, a refundable holding deposit, payments to change a tenancy and those associated with early termination of a tenancy (both when requested by the tenant), payments for certain utilities and services and default fees for late payment of rent and replacement of lost keys.
A breach of this legislation can be considered a civil offence, with a financial penalty of up to £5,000. Any further breaches within five years could result in a criminal conviction, a banning order and an unlimited fine. If a local authority chooses not to prosecute they can impose a financial penalty of up to £30,000 as an alternative.
What is the Tenancy deposit cap?
A key part of the new legislation is that tenancy security deposits will now be capped at the equivalent of 5-weeks’ rent for Assured Shorthold Tenancies (AST’s) with an annual rent of up to £50,000, or 6-weeks’ rent for tenancies with an annual rent of £50,000 or more.
These changes will apply to ALL new tenancies entered into from 1 June 2019, and any existing tenancies that are renewed on a fixed-term basis. It doesn’t affect any tenancies signed before 1 June 2019 (irrespective of when the tenant actually moves into the property), although the change will apply to any future fixed-term renewals.
Landlords who have taken deposits which exceed the new cap will be required to repay the excess to their tenant/s in due course.
How much is the Holding deposit cap?
Additionally, from 1st June 2019, holding deposits will be capped at no more than 1 weeks’ rent. Furthermore, Landlords and Agents will be legally obliged to return holding deposits to tenants within 14 days.
At Daisy IPS we have already reviewed our systems & procedures and taken appropriate steps to ensure compliance with the new legislation.