We were looking at how to make the most of your holiday money for last week's Finance Fridays. This week we are talking about the new rules for renters that have come in this month.
From 1st June the rules have been changed around what fees can be charged to renters. These rules apply to both landlords who directly rent out their properties and agents. Before renters could be charged a number of fees which wasn't always clear what they were for. Terms such as 'Administration fee' were very vague. Also landlords were charging for renewal of tenancy agreements and coming to the property for standard checks. There are still some things for which a fee can be charged so let's see what the rules now are.
Who does this apply to? - Just about everyone in the renting process – landlords, agents, private tenancies including assured shorthold tenancies, students, and lodgers.
When is it effective from? - The applicable fee ban came in from 1st June 2019 for new renters. If you signed an agreement before 1st June 2019 for the tenancy to start after 1st June then you can still be charged the fees. For those in existing agreements your landlord or agent will still be able to charge fees for administration costs, late payment and changing the tenancy agreement or asking for it to be ended early. From June 2020 these fees will also be banned.
What can I still be charged for? - No matter when you signed your tenancy agreement there are still fees which can be charged to you. These however are far fairer to both the landlord and the tenant.
If you are late with your rent next you can be charge a late payment fee after 14 days. This allows the renter a little breathing space but is not an excessive amount of time for the landlord to endure. Do note that a tenant can only be charged a late payment fee if it is mentioned in the tenancy agreement. You also cannot be charged more than 3% above the Bank of England base rate which is currently 0.75%. You can only be charged a late payment once – a landlord and agent cannot separately ask you to pay it.
If it is mentioned in your tenancy agreement you can be charged a reasonable fee if you lose any keys or access fobs. This means that if a new key costs £6 you can't be charged the fee for a new door. Your landlord may though say for security the locks need changing which they can charge you for.
Leaving early – If you wish to end your tenancy agreement early or without a notice period then you can be charged. Again it has to be reasonable costs. Your landlord may still request you pay the rent until a new tenant is found – after all they will be ones losing out and will probably still have the mortgage to pay.
Changing the tenancy agreement or assigning it – There is a £50 cap on this unless the landlord can prove that they need to charge more. Most tenancy agreements are very similar so this should not be the case. If a solicitor or legal advisor is required in looking over the agreement because of its complex nature then those fees can be passed on.
Other costs allowed – Deposits can still be asked for in the form of holding deposit if you have said you would like to rent the property but not finalised the details yet. A tenancy deposit is a standard request and any monetary amount handed over must by law be put in one of the three approved tenancy deposit providers.
A landlord may ask for rent to be paid in advance and usually a month's rent is required. If this does happen make sure you make a note of it and the dates paid to should that you pay in advance rather than in arrears so you don't lose out when you leave.
If the landlord pays the bill for the utilities that you use such as water, gas and electric then obviously they will charge you for this. However they can only charge you for what the bill actually is and they can't charge any fees on top of it.
Fees that are definitely banned – Checks made for references, credit scores or history and immigration rights. Any fees associated with drawing up or renewing a tenancy plus any other fees that come under 'administration'.
I've been charged a banned fee. What can I do? - If you have signed for and started your tenancy after 1st June 2019 but your landlord or agent has still charged you fees then you can ask for the fees back. If they refuse to refund them then you can go to your local council and report them. The council can then fine them. They can even have them banned from being a landlord if they continue to charge banned fees. In order to get your money back you may need to apply to a tribunal. If you have been charged a banned fee then you cannot be evicted under a Section 21 notice until you have been refunded the fee.
Do you rent or let out a property? How will these changes affect you?