If you are a landlord, you have a lot of things to consider in running your business. Many landlords feel under pressure due to the administrative side of their operations. There have been many regulatory changes and updates in recent years, but there are more to come. Landlords across the country should be ready for the Tenant Fees Ban which comes into force on the 1st of June 2019.

The Tenant Fees Ban applies to landlords and letting agents. Initially, the ban applies to tenancy renewals that come into force after the 1st of June. However, as of 1st of June 2020, the ban applies to existing tenancies, and clauses held within tenancy agreements.

Be aware of your new obligations

If a landlord collects an illegal payment from a tenant, the landlord has 28 days to repay the money. If the landlord fails to repay the money in this time, they are in breach of the ban.

The ban covers:

Credit checks Tenant referencing Inventory checks Checking-in and checking out Cleaning services Gardening services Administration charges

Landlords are no longer able to charge for these services. Given that many of these services are vital elements of the letting process, the landlord needs to absorb these costs. The cost of vetting tenants now falls upon the landlord, but the price of not vetting tenants could be high, so landlords need to ensure they can afford these services.

Services, where landlords can still charge a fee, include security deposits, holding deposits, rent payments and any charges relating to a default on the agreed contract between the landlord and tenant. However, there are restrictions on many of these fees which landlords must know.

Landlords cannot profit from certain services

When it comes to third-party costs or work where the landlord has paid, the tenant can only be charged the cost to the landlord. As an example, if the tenant loses their keys and the landlord has a new set cut, the landlord can only charge the tenant the cost of replacing the keys. Similarly, if the landlord pays utility bills, they can only charge the tenant the cost to themselves, they are not permitted to add an administrative charge on top.

If the tenant requests to leave the rental property, the landlord can charge a £50 fee, and if the cost of the landlord's work is higher, the landlord is required to provide evidence of the higher price. If a tenant leaves a property early, the landlord can only charge for lost rental fee. As an example, if the tenant vacates a rental property with two months left on their contract, but the landlord fills the vacancy within one month, the ex-tenant can only be charged for the lost rental income, one month, not the duration of their contract.

The holding deposit has a cap of one weeks’ rent, and landlords must decide within 15 days if the tenant’s application is successful. The security deposit is capped at five weeks’ rent if the annual rent is less than £50,000 and six weeks’ rent if the annual rent is over £50,000.

If you are a landlord looking for guidance and assistance in what you can and cannot charge tenants, please contact Bond Oxborough Phillips, and we will be happy to help.