The Landlords Guide To The “Tenant Fees Act 2019”


Say “Hello” to the ‘Tenant Fees Act 2019’, the shiny new legislation that swings into force on the 1st June 2019. It was given birth to ban and restrict letting agents and private landlords (in England) from charging tenants with certain fees, which includes charging referencing fees and oversized deposits.

While the legislation mostly throttles letting agents by the short n’ curlies, there’s no need for landlords to feel unmolested, because there’s also [potentially] plenty of reasons for us to cry to mummy about.

Alas, this one is important, so grab the bottle of the nearest poison to hand so we can run through this garbage…

Tenant Fees Ban Act

Quick question: did you heard about the “Tenant Fees Act 2019” before now, even in its most vaguest form? ’cause according to this article on JustLandlords (don’t bother clicking the link, it’s not a particularly engaging or useful piece), there’s a “lack of awareness about the change”

So, is it true or a pile of rotten cobblers? Just curious!

Before you scamper off because you know it all

Unlike with the last few legal updates I was, let’s say, ‘not absolutely dreading’ this Act after reading the early headlines and highlights, because on the surface the implications for landlords sounded minuscule and simple, which meant I’d have an easy time throwing this crap together and readying for publish. A lazy blogger’s dream! Yup, a totally self-serving victory that I cherished with all my heart.

If it’s at all humanly possible to piss one’s pants from excitement over a new landlord legislation – which it is unequivocally not – then this one would have resulted in a couple of nappy changes.

Unfortunately, the victory was nothing but a devastatingly disappointing figment of my wild imagination; regrettably, my pants are drier than a Nun’s…!

The deeper I buried my cranium into the finer details of the Act – which was approx 10 minutes before I planned on going to print – the quicker my heart started to sink and slip out of my ass like a greasy 12 inch saveloy, because it became apparent that there’s more to this monstrosity than I’d ever had hoped to imagine, and the mere few minutes I put aside to get the job done was comically too little. Not the first time I’ve heard that.

I’m definitely going to need something injected into my heart, and quite possibly, my ass, to get through this one.

My point is, there’s more to this act than a simple “tenant fee ban” that mostly applies to letting agents, so I must issue a word of warning for those that also threw the book in the bin after reading the headlines and thinking the story’s already been told. It hasn’t! So you may wish to stick around in case you accidentally learn something new.

If you happen to be a passer-by tenant on the wrong side of town, don’t fret! You’re in safe and tender hands. While this blog post is written for landlords by a landlord, you’ll still be able use the information to determine how the Act will [positively!] impact you.

Page contents:

Quick overview of what the ‘Tenant Fee Ban’ means (for landlords)…

  1. The Act specifically stipulates what fees landlords and letting agents can impose on Tenants. If any fee incurred by the tenant is not permitted by the Act it will be deemed unlawful.
  2. Tenancy deposits capped to five weeks’ worth of rent.
  3. Holding deposits capped to one week’s rent, and must be returned (there are a few exemptions).
  4. Only ONE holding deposit per property is permitted i.e. taking holding deposits from multiple applicants for the same property is not allowed.
  5. Section 21 notices cannot be served until any unlawfully charged fees or any unlawfully retained holding deposits are fully returned.
  6. Breaching the terms of the Act can lead to fines starting from £5,000.

Introduction to the ‘Tenant Fees Act 2019’

You can find the official details of the Legislation on the GOV website. As per, it’s not written for mere mortals or anyone that is limited to regular English.

Essentially, the Act defines what charges/fees a landlord or letting agent may require “in connection with a tenancy of housing in England.”

The starting point – actually, the primary principle – to understand is that ALL payments are prohibited unless the payment is expressly “permitted” under the Act. You can find a list of the “Permitted Payments” in Schedule 1 of the Legislation (I’ll go through them shortly in any case).

The Disclaimer & what you should expect from this blog post…

Okay, so onto the mandatory and crucial disclaimer, which I suspect many of you are already familiar with: I’m not even remotely qualified to provide legal advice, therefore nothing I say should be construed as such. You should always seek advice from an expert regarding any legal matters.

Anything I say on this matter – or any other legal matter – should be taken with a pinch of salt. If that. Taking my ramblings as anything else would be foolish. I still find farts of every variety funny, so let that be an indicator of what kind of mind you’re dealing with here.

What you should expect: since the unanticipated depth of the Tenant Act Fee 2019 nearly made me choke on my own saliva and keel over like a sack of donuts, I’m only going to cover the parts that I feel to be most relevant to me (as a private landlord in England), which in turn, I suspect will also be the most relevant to the average landlord (in England).

Ready? Let’s do this…

Who does the Tenant Fees Act apply to?

The Tenant fee ban applies to:

  • Assured shorthold tenancies in England
  • Tenancies of student accommodation (Student lettings) in England
  • Licences (lodger lettings) in England

“Prohibited Payments” (i.e. Fees landlords can’t charge tenants under the Tenant Fees Act)

I hope I’ve already made the message clear: you can’t charge tenants for anything other than the “Permitted Payments” listed further down the page.

So, that means a lot of the classics and golden oldies – which have contributed nicely to many beer funds over the years (not my own, mind you. My delicate palate seems to render beer in the same vein as horse urine) – are strictly prohibited:

  • Viewing Fees
  • Tenancy set-up fees
  • Inventory
  • Check-out fees
  • Professional end of tenancy cleaning (tenants will still be required to return the property in the state they received it in, and landlords can still recoup any repair costs from the deposit)
  • Referencing fees / Credit Check fees
  • Third-party fees (i.e. you can’t pull a fast-one and get a credit check company to directly communicate with the tenant on your behalf).

“Permitted Payments” (i.e. Fees landlords can charge tenants under the Tenant Fees Act)

The only payments you can charge in connection with a tenancy are:

  1. Rent
  2. A refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above.

    So, for example, if the rent is £580pcm, the calculation to determine the max deposit of five weeks is:

    580 (rent pcm) x 12 (months) = £6960
    6960 (annual rent) / 52 (weeks) = £133.84
    133.84 (weekly rent) x 5 (maximum weeks) = £669.23

    Please note, the calculation is an example based on a one year tenancy and for demonstration purposes only. You should seek guidance from the deposit scheme you secure your deposit with to assist in calculating the maximum amount you can charge.

    Couple of critical noteworthy points to chew on here:

    • There are no exceptions for taking a larger deposit for tenants with pets. I suspect this will have a significant impact, and it will make it even more unbearable than it already is for tenants with furry companions to find rental accommodation.

      Horrendous decision!

    • If you’ve taken a deposit that exceeds five weeks’ rent for a tenancy that started before the 1st June 2019, then you are not obliged to refund the excess (as this payment was not made after the cap came into force). However, you will be required to refund the deposit at the end of the tenancy in the usual way and any new tenancy agreed after this will need to comply with the new tenancy deposit cap.

      From my understanding, if the tenancy is periodic or rolls into one, the landlord is not obligated to refund any of the excess.

      To make life easier, the Deposit Protection Scheme (DPS) are now offering a facility to calculate the amount of deposit that should be returned to a tenant if a tenancy with the same tenant is renewed where a cap has been exceeded. I suspect the other two schemes will follow suit shortly (if they haven’t done so already). Either way, you should seek guidance from your deposit scheme on the best way to return any monies to comply with the new legislation.

      I’ve personally taken six weeks’ deposit for all my tenancies, so fuck my life! Urgh, just one week shy! ONE WEEK, you lousy son of a bitches!!!!

  3. A refundable holding deposit (to reserve a property) capped at no more than one week’s rent.

    Only ONE holding deposit is permitted per property; if you accept more than one holding deposit for the same housing from different applicants, you will be in breach of the Tenant Fees Act. The holding deposit must be returned to the tenant either in payment back to the tenant, or put towards the first rental payment, or the security deposit. However, there are some exceptions which allow the landlord to keep the holding deposit:

    • The tenant withdraws
    • The tenant doesn’t take all reasonable steps to enter the tenancy
    • The tenant fails a right to rent (immigration) check
    • The tenant provides misleading information which materially affects their suitability to rent the property

    Landlords will only be able to hold the holding deposit for 15 days unless an alternative ‘deadline’ date is agreed in writing. After the deadline, the holding deposit must be repaid within 7 days.

  4. Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher.
  5. Payments associated with early termination of the tenancy, when requested by the tenant (and if agreed by the landlord).

    Generally, the costs charged for early termination must not exceed the loss incurred by the landlord (usually the loss in rent resulting from a tenant’s decision to leave and/or the costs of re-advertising or referencing).

  6. Payments in respect of utilities, communication services, TV licence and council tax.
  7. A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement.

    The default fee for late payment of rent can be charged where the rent payment has been outstanding for 14 days or more (from the date set out in the tenancy agreement). Any fee charged must be no more than 3% above the Bank of England’s base rate for each day that the payment has been outstanding.

    I must confess, I’m not actually sure how to calculate the late payment fees (even with the guidance provided), but I’ve been told that it actually works out to pennies, so it’s almost pointless applying the penalty in the first place. I’ve always considered late payment penalties pointless anyways. In any case, if anyone is smart enough to provide a real example of how to do the maths (using simple figures), please leave a comment! It would be super appreciated.

Please! Please! Please! Let’s not get into the “what about this fee” and “what about that fee” tango! If it’s not listed above, then it is *almost* certainly a prohibited payment so you should not charge your tenants for it, or continue trying to charge for it via stealth strategies. For example, if your playful and unimaginative little mind is thinking about contractually charging a higher than normal rent for month one in order to recoup any losses, you’re bang out of luck, because they’ve plugged that anticipated dirty, gaping hole:

if the amount of rent payable in respect of any relevant period (“P1”) is more than the amount of rent payable in respect of any later relevant period (“P2”), the additional amount payable in respect of P1 is a prohibited payment.

As referenced earlier in this post, you’re very, very, very welcome to read the full details of the ‘Permitted Payments’ in Schedule 1. However, I accept no responsibility for the consequences of that tedious journey.

When does the Tenant Fee Ban start?

The ban is being introduced in two delightful stages:

  1. Tenancies that start on or after 1st June 2019: if you enter into a tenancy agreement, student let or licence to occupy housing in the private rented sector, you will be prohibited from charging any fees or other payments that are not included in the list of permitted payments.

    Where a tenancy agreement was entered into before 1st June 2019, you will still be able to charge fees until 31st May 2020, but only where these are required under an existing tenancy agreement. This might include, for example, fees to renew a fixed-term agreement where a tenant had already agreed to pay these.

  2. From 1st June 2020: the ban on fees will apply to all applicable tenancies and licences to occupy housing in the private rented sector. You will not be able to charge any fees after this date (other than those permitted by the Act), even if they are mentioned and agreed upon with in the tenancy agreement.

Penalties for not complying

Financial penalties: a breach of the legislation will usually be a civil offence with a financial penalty of up to £5,000, but if a further breach is committed within 5 years of the imposition of a financial penalty or conviction for a previous breach this will be a criminal offence. The penalty for the criminal offence, which is a banning order offence under the Housing and Planning Act 2016, is an unlimited fine.

Where an offence is committed, local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution.

Section 21: you cannot evict a tenant using the section 21 eviction procedure until you have repaid any unlawfully charged fees or returned an unlawfully retained holding deposit.

Meanwhile, all the other rules around the application of the section 21 will apply as normal.

On a sidenote, Section 21 notices for England have been updated to reflect the Tenant Fee Act – so going forward you should be using the latest version which includes a section mentioning it.

You’ll still have the Tenancy Deposit at your disposal

Just to clarify, and to bore you further to death, the Tenant Fee Act does NOT affect the landlords right to recoup any legitimate costs via the tenancy deposit. For example, costs to cover any damages and repairs.

I spotted a landlord having a hissy-fit on a forum a few weeks ago, about how deposits will become futile once the Act gets introduced.

I don’t know what she was drinking, but I want IN!

How will the ‘Tenant Fees Act 2019’ impact the average landlord?

Good question. Now you’re thinking like a winner!

1) Updating Tenancy Agreements

I’ve said it before and I’ll gladly say it again: the problem with most circulating tenancy agreements is that they are riddled with horseshit clauses and penalties (most of which aren’t even legally enforceable), which are often the amalgamation of several Frankenstein contracts being squashed together. They’ll certainly be even more toxic after 1st of June 2019.

Needless to say, now would be a splendid time to scour through your tenancy agreement and Where’s-Wally any potentially prohibited charges, and then get them scrubbed off the paperwork in preparation for when its required next. Or, if it’s a total eyesore, scrap your version altogether and source a clean version from a reputable outlet.

I’d be amiss if I didn’t say that the tenancy agreements available from my little website have never contained any clauses that impede on the requirements of the Tenant Fees Act (Oh, here you go, use this 30% discount code during checkout: TENANTFEEBAN). I know, shameless plug. I apologise for NOTHING!

‘Permitted Payments’ in Tenancy Agreements

Your Tenancy Agreement can set out the details of which a tenant is liable for a ‘default fee’ and how the fee will be determined.

The ‘default fee’ specifically refers to any costs associated to late payment of rent and replacement of a lost key/security device (if necessary, refer back to point number 7 from the list of ‘Permitted Payments’ to recap on the details).

If a tenancy agreement does not permit you to charge default fees (i.e. the charges aren’t mentioned), you may still be able to recover damages by claiming against the tenancy deposit at the end of the tenancy.

For those starting new tenancies after 1st June 2019

You should ensure your tenancy agreement doesn’t include any clauses that may attempt to extract any prohibited charges from your tenants. But even if it does – and the tenant signs the contract – any prohibited charges enforced will be unlawful and therefore could lead to prosecution.

For those tenancy agreements that started before 1st of June 2019

If your current tenancy agreement in circulation is plagued with clauses/charges that won’t be legally obtainable from the 1st of June 2019, you’ll be fine, because you will still be able to charge those fees until 31 May 2020 (assuming the fees are legitimate and fair). This might include, for example, fees to renew a fixed-term agreement (which, of course, has been agreed to by the tenant).

From June 1st 2020, however, the fees will no longer be chargeable, other than those permitted by the Tenant Fee Ban Act, so I’d personally update the tenancy agreement at the most suitable time in order to avoid any confusion.

2) If you’re a self-managing landlord…

I’m reluctant to believe that the introduction of the Act will have any critical impact on landlords in this camp, unless you’ve been getting away with – and relying on – charging tenants with excessive fees for God knows what.

If you’re self-managing and your ship does get rocked as a result of the Act, I’m going to go out on a limb and say you’re most likely doing something you shouldn’t be anyways.

From a personal standpoint, the Act won’t make any difference to me, and if it does, it’s so marginal that I can’t even think of any to mention. Historically, I have never passed on any of the ‘Prohibited payments’ onto my tenants, which from my perspective, is generally the bog-standard way when you’re self-managing. Correct me if I’m wrong, please!

The last time I required letting services, I used OpenRent to find tenants, which cost £29 for their marketing services, and I paid an additional £20 for their tenant referencing service. I undertook the viewings and inventory by my lonesome. It was all, as they say, a piece of piss!

Oh, but perhaps something worth pointing out is that after the 1st of June, many of the online agents *may* increase the base price of their tenant-find services, because while it’s not always clearly disclosed to landlords, many of the agents charge tenants a admin/referencing fee. A hefty one at that (at least, it’s usually relatively hefty compared to the cost of actual letting service you’re paying for).

However, if that does happen, it really shouldn’t inflict any serious pain, because you’re paying pennies for the service in the first place. So what’s a couple more pennies?

3) If you’re using High-street letting agents…

I remember vividly when the “Tenant Fees Act 2019” received the green light – the clear indicator was my Twitter feed lighting up like a Christmas Donkey – by teary eyed letting agents, all wondering how they were going to put food on the table after the Government had confirmed the date for slaughtering one of their most lucrative [and criminal *clears throat*] cash-cows.

Once the ban kicks in, Letting Agents (and landlords) will be forbidden to continue charging tenants with the majority of the shit they have been charging them with. For example, that means the days of letting agents charging tenants with Tenancy Renewal Fees, which is mostly an eye-watering fee for basically photocopying one of their Frankenstein tenancy agreements, will thankfully be a steaming turd of the past. It certainly wasn’t a bad little earner for anyone that didn’t mind charging people for doing sweet F-all.

They’ll certainly be no sympathy from me.

Of course, there’s no mystery and there never was: we all know how our beloved high-street agents’ bellies will remain satisfied, and so did they from the moment the news broke out.

If we Landlords don’t find the decaying residue of the slaughtered cash-cow worming its way onto our bill, I will literally eat the old girl’s udder. Every last square inch of it!

To be honest, I can’t even blame letting agents for doing it. It seems like the most logical solution, other than innovating, re-budgeting, focusing on improving service, and being content with the buttload they generate from their monthly retainers.

Gosh, can I acquire the assistance of a couple of lucky volunteers to fan me down with their flapping testicles and boobies, because I’m tired from just thinking about how much work that would all require? It’s obviously easier just to divert the costs onto the landlord.

So, if you find your high-street agent’s fees rocketing in the near future, the introduction of the Tenant Fee Act will most likely be the catalyst. So perhaps it’s a superb time to get on the Online Letting Agent hype if you’re not already strapped in.

4) Increasing rent…

One of the biggest concerns about introducing this Act is the probable risk of it causing a rise in rent rates, ultimately making the whole exercise pointless and even detrimental to the intended cause. Oh, the irony.

I can only assume that some landlords will be directly hit in the pockets after this Act rolls out (for whatever reason), so I fear the knee-jerk reaction will be to look for the quickest and easiest remedy, and no doubt increasing rent will be the solution calling the loudest.

I personally don’t think that would be the right course of action, but obviously I can’t stop anyone from doing it, especially those that are already barely surviving.

It wasn’t intentional, but I haven’t actually made it clear that I’m all in favour of the Tenant Fees Act, because I believe tenants have been paying a premium to simply ‘buy’ a product, and that seems bonkers to me.

I don’t consider this as tenants getting a break, I see it as tenants finally getting justice, so to hit them from a different angle, only to push them back into a position where they shouldn’t have been in the first place leaves a rotten smell in my pants.

I truly hope this outcome is avoided.

To all the decent tenants out there: I’m with you! Solidarity! *fist bump*

5) Returning portions of the tenancy deposit that exceed the cap

So, the tenancy deposit will be capped, so I’ll eventually need to return portions of the deposits’ that exceed the cap if any of my tenancies are renewed. I imagine I’m not the only sorry soul in this undesirable situation; there must be plenty of pet-friendly landlords lumbered into this mess, along with non pet-friendly landlords that simply don’t feel fulfilled with anything less than a six week deposit.

As said, I recommend getting in touch with your deposit scheme provider sooner rather than later to determine the best course of action to remain on the right side of the law. They should all have already released some helpful guidelines on their respective websites.

Resources for more information

  • Tenant Fees Act 2019: Guidance for landlords and agents – this guide provided by GOV.uk is by far the best resource I have encountered, and it’s where I gathered the vast majority of my information. It’s easy to understand, it covers everything in detail, and it also runs through a whole heap of practical Q&As.

    If you’re eager to read more on the Act (Lord only knows why that would be the case), then make that your go-to resource!

  • The official Tenant Fees Act 2019 Legislation – the law in all its full glory. It’s a genuine stiffy-killer. ZzzzzzZZzzzZZZZ!

… DONE!!

Believe me when I tell you that this was far more painful for me than it was for you. So I don’t want to hear of any shitty complaints or smart-ass remarks about lapsing into a comma or twenty while trying to divulge this blog post.

So, anyways, after reading all of that, what are your thoughts?

Lastly, to reconnect with my “Quick question” earlier on; if you did know about the Tenant Fee Ban already, did you do the unthinkable and just learn something new? If not, whooooopsie! Let’s *hug* it out.

Love & Peace all xoxo

71 Comments- Join The Conversation...

Showing 21 - 71 comments (out of 71)
The Landlord Avatar
The Landlord 31st May, 2019 @ 09:35

@jensur
Great assessment, and I couldn't agree more with you.

For some reason I thought OpenRent were one of the agents that didn't charge tenants for referencing (only the landlords).

On their FAQ, it says, "What charges are there for Tenants? None! No admin fees, no contract signing fees, no hidden charges."

I definitely wouldn't have changed your tenants either.

In any case, good luck with the viewings, hope it goes well :)

21
The Landlord Avatar
The Landlord 31st May, 2019 @ 09:41

@Claire,
Thanks Claire, appreciate it.

Agreed. I can't speak for individual agents, but all letting agents, both online and highstreet, should be aggressively getting in touch with their landlords and informing them of this new Act and the implications.

22
The Landlord Avatar
The Landlord 31st May, 2019 @ 09:41

Thanks @Alan!

23
The Landlord Avatar
The Landlord 31st May, 2019 @ 09:43

@Sue W-H

*High-five*

You clearly know plenty ha :)

24
The Landlord Avatar
The Landlord 31st May, 2019 @ 09:43

@jan
Perfect! Thank you!

25
The Landlord Avatar
The Landlord 31st May, 2019 @ 09:50

@Dee
Good question.

I think, for once, they have been quite thorough with this legislation, so if it's not listed as one of the exemptions, my presumption is that the holding deposit must be returned even if prospective tenants fail the referencing.

It's not ideal because it can add expenses to landlords, but at the same time, it does make sense to me that landlords have to absorb the costs of failed credit checks. It's part of the process, really. It would be like Mortgage lenders charging us for applying for a loan that we don't end up qualifying for.

I typically shortlist my applicants to 2-3, and then do credit checks on them.

Many thanks, Dee!

26
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Amanda 31st May, 2019 @ 09:56

‘Quick question: did you heard about the “Tenant Fees Act 2019” before now, even in its most vaguest form? ’cause according to this article on JustLandlords (don’t bother clicking the link, it’s not a particularly engaging or useful piece), there’s a “lack of awareness about the change”

So, is it true or a pile of rotten cobblers? Just curious!’

ANSWER: Yes, I've known it was coming for over a year.

27
The Landlord Avatar
The Landlord 31st May, 2019 @ 09:58

@Amanda
Fine!! Miss Know-it-all :)

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NotSoNewbieLandlord 31st May, 2019 @ 09:59

Thanks for this article. Love your entertaining style for such a dry topic. I thought I knew it all too but have learnt lots from this article.

All I charged my tenants was the £20 referencing fee Openrent do automatically. I think it's a bit off that we have to pay this now. What if they fail the check after agreeing to it while knowing they have dodgy credit? 🤔

29
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Kevin Warrington 31st May, 2019 @ 10:01

The bill is vague with regard to lost keys and lockouts. As a self managing landlord, I would charge £30 call-out for my time and fuel (an uber taxi for the journey would be £25), plus £5 for a key, which is a fair price but the bill implies I can only charge £5 because that's the only invoice I can produce. Surely this will result in landlord's insisting that tenant's should call a locksmith at their cost.

30
The Landlord Avatar
The Landlord 31st May, 2019 @ 10:02

@NotSoNewbieLandlord
Many thanks, appreciate it. Glad to hear you learned something new.

Good timing. Dee asked the same question - I gave my thoughts in comment #26

31
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mrsdee 31st May, 2019 @ 10:05

Thank you so much for saving my bacon. I could have had a fine of up to 5k all for ONE WEEKS RENT on one property...a small studio flat. I contacted DPS and they are sending me the calculation tool and promise once I submit the figures to them they will return the difference to the tenant.Thank you again.

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The Landlord Avatar
The Landlord 31st May, 2019 @ 10:05

@Kevin Warrington
Fair point.

My opinion is, you can offset the time/fuel against your tax bill as an expense, but you can't pass it onto the tenant in that particular scenerio.

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The Landlord Avatar
The Landlord 31st May, 2019 @ 10:06

@mrsdee
Great news, glad your bacon has been officially saved :)

34
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Steve G 31st May, 2019 @ 10:25

Hi thanks for that. Sorry if I missed this but......Please define one weeks rent, for the DPS deposit. My monthly rent is £580. So is five weeks
deposit £580x12=£6960 divided by 52 =£133.84 x 5 = £669.23. Or is the monthly rent of £580 simply divide by 4 and x by 5 =£725. So is it £669.23 or £725?
Thanks

35
The Landlord Avatar
The Landlord 31st May, 2019 @ 10:29

@Steve G
So, I believe, the following is correct: £580 x 12 = £6960 divided by 52 =£133.84 x 5 = £669.23

36
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mrsdee 31st May, 2019 @ 11:24

This is why I am so grateful for your blogs. The actual calculation is ambiguous and for a simple error this could be costly to a landlord. After reading the blog, I contacted the DPS directly and they will do the calculations. Complications arise if rent is pcm or four weekly. 5 week months and 4 week months and 53 week years are all thrown into the maths.#confused

37
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Germaine 31st May, 2019 @ 11:51

So despite reading multiple times im still having a blonde moment!
My tenant has been in situ since Jan 2017, hes a royal pain in my backside with late/missed rent payments, i have not renewed his AST so is on a periodic/rolling tenancy. However I have not increased his rent EVER! now the rent is out of sync with market rates and i plan on increasing it by a nominal sum. Does this require a new AST agreement (just paid for your version) or can i getaway with out the new AST agreement?

38
The Landlord Avatar
The Landlord 31st May, 2019 @ 11:55

@Germaine
You can either issue a new tenancy agreement (which will effectively start a new tenancy), or you can continue the same tenancy and increase the rent by issuing a Section 13 rent increase notice! More details on section 13 here: https://www.landlordsguild.com/how-to-increase-the-rent/

39
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Rachel 31st May, 2019 @ 12:37

I think the reason the aforementioned landlord was saying this will make deposits irrelevant may be..

If a tenant decides not to pay their last months rent upon leaving, are you really going to bother chasing them for it. Take it out of the deposit, which leaves a paltry sum of one weeks rent to cover any damage (which we all know is bullshit)

40
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Cyril Moseley 31st May, 2019 @ 12:38

Very informative article written in a humorous easy to understand style. Take no notice of Alistair McFarlane, stick to your own inimitable style. You obviously have a good grasp of this very tricky industry and your sense of humour makes dry information readable and rememberable. Keep up the good work.

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The Landlord Avatar
The Landlord 31st May, 2019 @ 12:47

Hi @Rachel,
But she was saying the deposit was pointless in reaction to the introduction of the new Act, but what you described has always been a possibility, even before the Tenant Fee Ban...

42
The Landlord Avatar
The Landlord 31st May, 2019 @ 12:49

@Cyril
Many thanks, appreciate it :)

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Germaine 31st May, 2019 @ 12:59

You are my hero! have drawn up sect 13 notice. latte budget top up here we come ;-)
Thank you squillions for saving my day off from tedious admin. Next to Hugh Edwards & Gary Barlow your on my dream dinner guest list!
Happy weekending :-)

44
The Landlord Avatar
The Landlord 31st May, 2019 @ 13:01

@Germaine
You're welcome, and I'm flattered... err... I think!

You too, have a great one!

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Jenny 31st May, 2019 @ 14:16

Thank you for your bloggs. May I ask the question about electric safety checks? I know as landlords we have to do electrical safety checks every 6 years, but do we have a window to get this work done or does every house we rent out have to be done by end of Oct 2019.

Or does it mean by any chance that we have a window of 6 years to get this work done from Oct 2018?

Thank you

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The Landlord 31st May, 2019 @ 14:21

@Jenny,
You're welcome!

There isn't currently any legal requirement for electric safety checks for single-let properties in England from what I'm aware, so I'm not entirely sure what the context is of your question...

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Alix 31st May, 2019 @ 16:38

Thanks for the info. Informative and funny as ever

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Tracy 31st May, 2019 @ 18:22

Sorry for being thick, just want to get it right 🤔 so I would have to pay the check out fee done by an independent in future?

Also I had the carpets cleaned profesionally before my tenant went in and showed them the receipt. I had it written into the contract that they should be professionally cleaned when they vacate and that a receipt would be required to prove it was done. Am I right in thinking this is no longer enforceable please?

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Paul Barrett 31st May, 2019 @ 18:35

There is no need to reference any tenant.
All you have to do is advise any potential tenant applicant that they will NOT be considered for a tenancy UNLESS they show the LL a Tenant Referencing Passport.
This would cost the tenant about £60 from LRS and is valid for 3 months.
Any tenant who refuses to purchase their TRP simply won't be considered by the LL.
It is the right of any prospective tenant to NOT be considered by a LL.
Of course the risk for the LL is they may have no prospective tenants if nobody chooses to buy their own TRP.
But somehow I doubt this will be the case.
Desperate tenants trying to source a rental property from what are very scarce supplies will do whatever they can to beat other tenants to a rental property.
A TRP which might be sufficiently good to qualify the prospective tenant for RGI will cause most LL to immediately accept the tenant.
Personally I will not bother ever again referencing any tenant prospect.
For me to consider them the prospective tenant will need to show me a TRP.
Of course I could find that I have no tenant applicants.
We'll see who blinks first!!!
Somehow I doubt it will be me.
I have assets that tenants are desperate to utilise.
The TRP will at least get me to consider them.
Without one they just won't even be considered by me.

Then we have the deposit conundrum.
Well here are a few ways of beating it.
As many LL may know it has been ill-advised to take anymore than 2 month's rent as a deposit.
This was because a Premium Tenancy would be created which no LL would wish to occur.
So now a LL may only take 5 weeks rent as deposit.
However the tenant will be advised that to cover the additional 3 weeks rent that will still be required even though the TFA bans this it will still be taken.
So the tenant will be advised that the rent for 6 months will be what the rent might have been but will now include the additional 3 weeks rent spread over 6 rent payments.
At the expiry of the 6 month AST it will proceed onto a SPT or CPT.
Attached to the original AST or with even a new one being set up at no cost to the tenant will be an appendix stating that the rent will be reduced definitely by 3 weeks rent for the next 6 months.

1 month before the end of 6 months of a periodic tenancy or a new AST a S13 will be issued to take effect at the beginning of the 13th month.
If a 2nd AST has been used the tenants will be advised by the LL that it will be considered as a periodic tenancy and that the tenants may give just 1 months NTQ without penalty.
When the tenant vacates and providing there are no deductions required from the deposit the full 5 weeks deposit will be refunded.
Now because the LL is a very nice chap he will offer the tenants a goodwill gesture for being very good tenants.
This will by pure coincidence be equal to 3 weeks of of the rent for the 2nd rent period of 6 months.
There is simply no way that a goodwill gesture could ever be considered as a deposit.
If the tenants misbehave then there would be no goodwill gesture.
There just defeated the deposit restriction.
There is also the possibility of 5 weeks rent being taken as a deposit plus 12 extra weeks worth via one of these deposit insurance policies
So that could leave the LL 17 weeks of deposit protection!!!
Not sure whether a deposit insurance fee is one of these permitted deposit fees.
Personally I would most probably waive the additional 3 weeks deposit if the tenants qualified for RGI
If tenants think they can avoid having any 'skin in the game' they need to think again!!

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The Landlord 31st May, 2019 @ 20:09

@Tracy
Not so much thick, but it's almost like that you didn't even read the blog post haha! Both those questions were answered *clears throat* quite clearly :)

1) "check out fees" is not listed as a "permitted payment", so it can't be passed onto tenants. I also specifically listed it as an example of a prohibited charge (i.e. landlords can't charge tenants a check out fee).

2) "If your current tenancy agreement in circulation is plagued with clauses/charges that won’t be legally obtainable from the 1st of June 2019, you’ll be fine, because you will still be able to charge those fees until 31 May 2020 (assuming the fees are legitimate and fair). This might include, for example, fees to renew a fixed-term agreement (which, of course, has been agreed to by the tenant).

From June 1st 2020, however, the fees will no longer be chargeable, other than those permitted by the Tenant Fee Ban Act"

Basically, you'll be able charge your tenants for the carpets to be cleaned if the tenancy ends before 1st June 2020.

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Paul Barrett 31st May, 2019 @ 20:58

@Landlird
What I take from your relevant and correct advices is that it is better to get in the swing of things and work on the basis that 2020 is already here.
Amend those AST etc.
I wonder if the Govt has amended it's 154 page recommended AST!?

It is clear from everything you have so insightfully suggested etc that LL heed to be on their game big time.
I consider that the gloves are well and truly off now. The private LL is under attack like never before.
If they don't get their ducks all in a row they could be seriously clobbered big time.
Let us hope that lits if LL read your timely blog.
However based on the general complete lack if engagement by most LL I fear that many LL will suffer enormously.
Loads of work for no-win, no-fee lawyers.
I see a lot of sheep LL ready to he slaughtered!
I try and keep up to date with things but even I struggle to keep up with all rents he nuances of recent legislation.
I love the most recent stupid one where you have to give a EPC and Gas cert to a tenant BEFORE they sign an AST!!!
All things that could really give a LL a very had day!

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Natalie 1st June, 2019 @ 09:29

I’m a private landlord that manages it myself and agree this new Act is great for tenants. Now the Government should turn its attention to leaseholders and beastly money grabbing freeholders but that’s a whole new beast right there....
Thanks so much for your informative and witty articles. When one plops into my inbox I stop everything to read it. Fact. Have a good weekend. X

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The Landlord 1st June, 2019 @ 09:45

@Paul,

Yup, I definitely think we should be working on the basis that the Act applies to all of us right now - that will help avoid any transitional teething problems, including the inevitable "oh, I forgot" dilemma.

I mean, how many landlords do you think put the 31st May 2020 in their diary?

Completely agree, now more than ever is there a huge market for "no-win, no-fee" lawyers to make a killing at the expense of Landlords due to all the prosecutable legal requirements. It's tiresome.

Lord only knows how many landlords are completely oblivious about this new Act, but I suspect there won't be a shortage of them.

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The Landlord 1st June, 2019 @ 09:47

@Natalie
One [baby] step at a time, but I definitely think this one was a good move, in theory anyways (I'm still unsure about how it or if it will impact rent rates).

Now, that's a wonderful little fact you just dropped, so thank you, it's very much appreciated! x

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Ray 1st June, 2019 @ 11:34

Good stuff, thanks for the write up :)
Foxtons and their up to £1100 moving in charges, based on the monthly rent... gone :)
And gone are the ridiculous check in/out company fees that, at the last place I moved out of even included counting the number of chips in one of the mugs! ... There were two chips when I moved in... I Swear! ;)

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Lesley 1st June, 2019 @ 15:48

If your AST was issued before 1/6/19 and simply rolls over into a Periodic Tenancy I don't believe you need to refund any 'excess' deposit held. This will only apply if you renew/reissue the tenancy.

If more than one person (household) applies for your tenancy are you able to hold more than none holding deposit (1wk rent)? Provided of course you return it to any 'unsuccessful' applicants?

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The Landlord 1st June, 2019 @ 16:03

@Ray
No probs!

Yup, God only knows how the big agencies will recoup those big losses - there's no way they'll be able to lump the whole lot onto landlords.

Either way, it's a great win for tenants, so enjoy! :)

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The Landlord 1st June, 2019 @ 16:09

@Lesley
Yup, I'm under the same belief regarding periodic tenancies and the excess deposit.

According to the GOV guide:

Q. If a tenant paid a tenancy deposit which exceeds the cap before 1 June 2019, do I need to re-pay the amount of the deposit above the cap?

No. Landlords and letting agents are not obliged to immediately refund part of a tenancy deposit that is above the cap but was paid before 1 June 2019. If a tenant signed a tenancy agreement before 1 June 2019 (and that tenancy is continuing or is a statutory periodic agreement) then the tenant will be bound by the terms of that contract until it is either renewed or terminated.

In answer to your 2nd question, nope, you can only take ONE holding deposit per property:

Q. Can I take more than one holding deposit?

No. A landlord or agent that accepts more than one holding deposit for the same housing will be in breach of the Tenant Fees Act. This means that any holding deposit taken where the landlord or agent is already in receipt of a holding deposit for the same housing will be a prohibited payment.

The purpose of a holding deposit is to enable both the landlord and tenant to demonstrate their commitment to entering into a tenancy agreement on the terms agreed whilst reference checks are undertaken.

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Lindsay 3rd June, 2019 @ 08:09

Thanks again for keeping us updated. Newbie landlord so your,advice invaluable. Using managing agents due to distance.

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Soraya Bueno Santos 3rd June, 2019 @ 18:10

Hello, i need some help and advice, now i've a contract with an agency that ends at the end of july, so i would want to stay for more months but with another person and the agency is asking me to pay 500 to amend that contract. Can they actually do that as i understand that im not amending anything, im doing a new one or a renewal. Thanks

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The Landlord 3rd June, 2019 @ 18:55

@Lindsay
Many thanks, appreciate it!!

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The Landlord 3rd June, 2019 @ 18:57

@Soraya
Seems extortionate. Not surprising at all, though.

Everything you need to know will be in this guide for tenants.

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tao 3rd June, 2019 @ 21:13

that was a very informative and well written blog that actually had me pissing myself laughing in parts of it. long may your crude and offensive language continue to bring a smile to my miserable face

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Lizzie from Cheshire 6th June, 2019 @ 10:47

Big high five to you.
Thanks again for tickling my day!. Seriously though has anyone got any ideas to encourage tenants to leave our property half decent. I've always returned the deposit regardless, but I'm getting too decrepit to keep swilling out a pig sty,
open to ideas.

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Paul Barrett 6th June, 2019 @ 13:53

@Lizzie etc

Expect to become even more decrepit as you will now have to pay for cleaning.
No more professional cleaning deposit deductions allowed.
So do it yourself or employ someone at your expense.
If it isn't too bad but not good enough I always offer new tenants £100 to clean it themselves.
Inevitably they all clean when they move no matter what cleaning gas been done
This is what I have done for the past 4 years and it works.
Just have to build the £200 into rent along with a lot of other things what with the TFB.
My rent will be increasing by £100 pcm mostly to pay for S24 but now all the other things.
I don't think I have had a RTI for over 3 years now.
No pay rises for LL!!

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Stephen 11th June, 2019 @ 14:43

Forgive me I’ve got this wrong but, wouldn’t these fees be termed a business expense and, as such, be reclaimed by offsetting against your income (rental income) for Income Tax purposes? I’ve never charged them and always set mine off against my Rental Income and HMRC have allowed it each time.

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The Landlord 11th June, 2019 @ 15:00

@Stephen
Yes, you can offset the mentioned fees against your tax bill (as every landlord should), but that's not the same as reclaiming the money.

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The Landlord 11th June, 2019 @ 15:02

@Lizzie from Cheshire
^5, partner!

Tough one!

I usually just rely on thorough referencing, regular inspections, and I try to make my expectations clear from the offset (during the viewing)! Other than that, I just shut my eyes and hope for the best :)

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Dee 6th August, 2019 @ 08:56

Hi! I have found a perfect room in a shared house at a perfect location; but Agent is asking me “admin fee” I told him admin fees are banned and even showed him the link to Shelter’s website about that but he is insisting on the admin fee and said if I’m not happy with that it’s my problem and he can rent the room to someone else. Basically he is trying to make me accept the admin fee.

What should I do? He just asked for 2 week deposit + 1 week rent plus £300 admin fee 🤦‍♀️ I haven’t seen the room yet; will go to see today but I would like to know what can I do; I only have agent’s first name and number only.

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Andy jhonson 16th August, 2019 @ 12:22

Thank you for posting the blogs. This article is written in a humorous way and easy to understand the blog.

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