On 1 June 2019, the Tenant Fees Act came into force, introducing a cap on deposits and protecting tenants from unreasonable charges being levied by landlords and letting agents. The new Act is anticipated to save tenants approximately £240 million a year. This is the first of two blogs covering the main changes. Part Two will be available shortly.
A major change is that holding deposits (where you put down an amount to “reserve” a property) are now capped at one week’s rent. There are strict time limits imposed in relation to holding deposits.
A tenancy agreement has to be entered into within 15 days of the holding deposit being taken. If that does not happen then the holding deposit has to be returned within 7 days.
If the tenancy is entered into before the 15 days has expired the holding deposit must be returned within 7 days of the agreement being entered into unless the tenant has consented to the holding deposit being put towards the first month’s rent or the security deposit.
If the landlord decides not to enter into a tenancy agreement then the holding deposit must be returned within 7 days of that decision being reached.
There are exceptions to the 3 positions above in relation to the landlord retaining the holding deposit if the tenant has given false or misleading information, if the landlord is prohibited by Section 22 of the Immigration Act 2014 from renting to the tenant or if the landlord serves a notice on the tenant explaining why the holding deposit is not being repaid within 7 days.
New rules in the Tenant Fees Act come into force regarding security deposits (the amount you pay to ensure you don’t break the terms of the tenancy agreement) which are capped at five weeks’ rent (unless the annual rent is over £50,000 when six weeks rent can be taken).
Tenants cannot be asked to pay more than these amounts to secure their property. This applies to tenancies entered into after 1 June 2019 and to all existing tenancies after 1 June 2020. If a landlord holds a deposit of more than 5 or 6 weeks rent they have to return it to the tenant by 29 June 2020, or earlier if the tenancy renews before 1 June 2020.
Many other steps are being taken to help improve the relationship between landlord and tenant and we’ll be covering some of these in our upcoming blog ‘Changes brought about by The Tenant Fees Act – Part Two’. For expert advice on your rights as a tenant or landlord, you can contact us here.