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Tenant fees Q&A

Jul 21, 2022 | Article

Tenant fees Q&A

With the tenant fees act in force in England since 1st June 2019, and the Welsh fee ban which followed soon after, there are lots of questions to be answered. With regards to the Tenant Fees Act 2019, we look at some of the most common questions about what you can and cannot charge.

What can a landlord or letting agent charge for?

Since the 2019 tenant fees act there are 6 payments you can charge for:

  • A holding deposit which is refundable for those tenants that want to move into the property (1 week’s rent)
  • Refundable deposit which can include the holding deposit (5 weeks) if the rent is over £50k annually then you can take 6 weeks’ worth of rent as a deposit.
  • Rent
  • Tenancy changes to the contract, the maximum fine is £50
  • Any late fees for rent payment or charges for lost keys or fobs
  • Charges for early termination of tenancy contract

You can check out Reposit for a smart alternative to cash deposits and to protect yourself better.

Can a property manager charge for inventory or administration checks?

Among the non-permitted payments in the Tenant Fees Act 2019, are administration fees, mandatory cleaning fees, check-in and check-out fees, and credit checks. Tenants cannot be charged these fees because they are illegal. Fees for guarantors, gardening, and cleaning are also prohibited.

Referencing?

Despite the importance of tenant referencing, landlords and property managers will still need to check references when renting property. It is illegal for you to charge tenants for reference checks after 1st June 2019.

Would it be possible to require the tenant to do their own reference check?

There is an additional fee associated with this, so nope, sorry. According to the website of the Landlords Guild:

Landlords and letting agents may not only request a prohibited payment but may also ask a relevant person to make a prohibited payment to a third party (for example, asking a tenant to pay directly to a referencing company).

As a letting agent or landlord, you must cover the cost of reference checks. At Lofti we allow landlords and agents to do their own referencing in the simplest of ways. We look at all relevant paperwork and history for the tenant giving a very accurate reference. Our tenant reference is also RGI eligible. Not only that we also allow landlords and agents to manage their properties and maintenance on the same exact system.

Can I lower the rent after starting at a higher price?

It is not possible to ‘front load’ rent at the beginning of a tenancy. Initially charging a higher rent and then lowering it after a few months is known as this practice. The rent can also increase after a few months (like a broadband internet contract) or be discounted initially.

You can still increase the rent in accordance with the agreement if the tenancy includes a rent review clause, perhaps every year.

What if I add extras and charge a commission on top of rent?

Optional extras can be offered on top of the rent, of course. It gets murky when it comes to commissions. The legislation does not specify that an optional service can be charged extra.

Whenever you charge a commission or additional fee, be transparent. On your website and any paperwork, make sure to clearly state that you are earning a commission.

Can a landlord or agent charge the tenants for damage or mess?

According to the Tenant Fees Act 2019, normal wear and tear cannot be made mandatory. It is possible to specify that a property must be cleaned to a certain standard (e.g. professional) even if you cannot specify who should clean the property.

If the property is left in an unsatisfactory state, you can deduct payments from the deposit to compensate for this. The tenant will need to know how much the repair will cost.