Landlord Legislative Update May 2019 Residential Landlord Update for joomag | Page 11

CHANGE OF AGREEMENT PENALTIES
A change to a tenancy is any reasonable request to alter a tenancy
agreement, after the tenancy agreement has become binding.
Examples of commonly-requested changes are:
• To be able to keep a pet at the property
• To change one of the tenants on a joint tenancy
• To be given permission to decorate or alter the property 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. In such
a case, local authorities will have discretion whether to prosecute
or impose a financial penalty. Where a financial penalty is imposed
this does not amount to a criminal conviction. A breach of the
requirement to repay the holding deposit is a civil offence and will
be subject to a financial penalty of up to £5,000.
A charge can be made for any other amendment which alters the
tenant’s obligations in the agreement.
A reasonable charge here is up to £50 (inc. VAT). A higher claim
can be made but the agent or landlord must show why it was
reasonable to incur a greater cost. Landlords and agents must not
charge fees for variations to their standard form tenancy agreement
that a prospective tenant requests before the tenancy agreement
has become binding.
If a prospective tenant wants a tenancy agreement to be amended
before it has become binding (for example to allow pets or smoking)
the landlord or agent must not charge a fee but may charge a higher
rent to reflect the additional wear and tear.
If a tenant asks to change the terms of their tenancy agreement, the
landlord can make their consent to those changes conditional on
the tenant paying a higher rent. If the tenant is not willing to pay
the higher rent, the landlord could refuse permission to keep the
pet.
E A R LY T E R M I N AT I O N F E E S
Claims for deposit deductions can still be made in connection with
the early termination of the tenancy if a tenant has requested this
(other than when exercising a break clause in accordance with the
terms of the tenancy agreement).
What is considered to be a breach of the ban?
Each request made for a prohibited payment is a breach. For
example, the following would be considered multiple breaches:
• charging different tenants under different tenancy agreements
prohibited fees
• charging one tenant multiple prohibited fees for different services
at different times
• charging one tenant multiple prohibited fees for different services
at the same time
• charging one tenant one total prohibited fee which is made up of
different separate prohibited requirements to make a payment e.g.
£200 requested for arranging the tenancy and doing a reference
check, equal or equates to multiple breaches.
If there is a fine for multiple breaches at once, and there has not
previously been a financial penalty served, the financial penalty for
each of these breaches is limited to up to £5,000 each.
W H AT T H I S M E A N S F O R YO U
For example, a landlord or agent may agree to early termination
on the condition that replacement tenants are found. In this
circumstance, the landlord or agent can claim from the deposit the
costs associated with readvertising the property or referencing new
tenants, provided evidence is given to confirm that the claim and its
amount is reasonable. From 1 June 2019 we will no longer be able to charge tenants for their
reference checks or the fee for creating the tenancy agreements,
these fees will, moving forwards, be a landlords responsibility to
meet. We are liaising with our referencing company to negotiate
their fee so that this saving may be passed on to yourselves.
If a suitable replacement tenant is found, the landlord or agent
will only be permitted to charge rent until the new tenancy has
started. Landlords are only entitled to recover rental payments
that the outgoing tenant should have paid to the extent that the
replacement tenant will be paying a lower amount. With such a big change in the industry, and more and more costs
being applied to landlords, we are proactively reviewing all the rents
on our managed properties to ensure that ‘the math of letting’ still
applies and that your portfolio is profitable and a good investment
for the future.
LANDLORD LEGISLATIVE UPDATE 2019 • 9