The tenant’s guide to the new ban on fees
The new Tenant Fee Act of 2019 comes into force on 1st June, banning letting agents from charging certain fees to tenants.
This is great news for renters but they will still need to pay some charges, including a deposit, the cost of which is being capped under the new rules.
However the size of the cap depends on where you are renting, said room share platform, ideal flatmate, which has worked out the cap on the typical rents in 20 UK cities.
How much deposit should you pay?
Under the new legislation, a refundable tenancy deposit must be capped at no more than five weeks’ rent where your total annual rent is less than £50,000, or six weeks’ rent if your total annual rent is £50,000 or above.
So for example, ideal flatmate worked out that, in London where the average weekly rent is £420, the average tenant should be paying no more than £2,099.
At the other end of the scale, Liverpool is home to an average weekly rent of £125, so tenants in Liverpool should pay no more than £624 as a deposit.
This deposit sum ranges from £766 in Sheffield, £980 in Portsmouth to £1,376 in Cardiff but of course, it will be individual for every case.
Most letting agents will also charge you a holding deposit which is a refundable deposit to reserve a property. From the start of June, they will only be allowed to charge you one week’s rent for this deposit.
Again this cost will be unique to the properties rent but to give you an idea, ideal flatmate calculated it would cost the average tenant £420 in London, £269 in Bristol, £191 in Leeds and £145 in Plymouth.
A default fee can be charged for late payment of rent but only where the rent payment has been outstanding for 14 days or more from the date set out in your tenancy agreement, so if they charge you within two weeks of your rental due date, they’re breaking the law.
Any fee charged by a landlord or agent cannot be more than 3% above the Bank of England’s base rate for each day that the payment has been outstanding so again, any fee charged which exceeds this amount is unlawful.
Based on paying your rent late by a 30 day period this means you are only liable to pay between £1.54 and £5.18 for the whole month it is late.
While there is no cap on additional charges, for example, to replace a lock and key, the Tenant Fee Act 2019 does state that they must be reasonable. It costs around £80 to have a new lock fitted and key supplied and it’s always worth asking for proof of work such as a receipt to make sure you are paying the right sum.
Changes to tenancy
Circumstances change and while they sometimes can’t be avoided it’s fair that when moving the goal posts there is some form of compensation involved. But the days of paying hundreds of pounds to change a few words on a tenancy agreement are gone and now any changes to a tenancy can only incur a charge of £50 or less unless a reasonably higher cost is incurred by the agent or landlord.
Early termination of a contract can put a landlord at a disadvantage and early termination fees can include any outstanding rent plus an additional charge from the letting agent. Beware, early termination is still one area of the letting industry where the charge remains variable and dependent on the agent so try to avoid it at all cost to dodge any unfair fees.
Co-founder of ideal flatmate, Tom Gatzen, said: “The introduction of the Tenant Fee Act is not before time as for years many letting agents have been taking advantage of a lack of regulations and the ignorance of tenants to charge some outrageous sums for things like tenancy changes, late payments, new keys and more.
“While this will hopefully put an end to this practice, there’s bound to be a teething period and we wanted to arm the UK’s tenants with the knowledge they need to be savvy in the sector and ensure they don’t pay more than they need to.
“The cost of renting whether it’s London or Liverpool is high enough as it is, so it’s important to maximise the rest of your income and only pay what’s fair in any given situation.”