Landlord Legislative Update May 2019 Residential Landlord Update for joomag | Page 8

TE N A NT FEES
AC T
The majority of English law is based on Common Law which implies
that an action is legal unless specifically made illegal, however the
new Tenant Fees Act has been based on Roman Law which implies
that all actions are illegal unless specifically made legal. This means
that the new law has had to define permitted payments as specific
legal terms. The Tenant Fees Act prevents landlords and their
agents from requiring tenants to make any payment as a condition
of granting, renewing or continuing a tenancy apart from:
• Rent
• A capped refundable Tenancy Deposit
• A capped refundable Holding Deposit
• Payments in the event of a default
• Payment on variation, assignment or novation of a tenancy
• Payment on termination (surrender) of a tenancy
• Payments in respect of Council Tax
• Payments for utilities (electricity, gas or other fuel, water or sewage)
• Payments for a television licence
• Communication services (telephone other than a mobile
telephone; the internet; cable television, satellite television)
• Green Deal charge
Specific definitions of these payments are:
RENT
A tenant’s regular payment to a landlord for the use of the property
under a tenancy is a Permitted Payment.
If the amount of rent payable at the start of the tenancy is more
than the amount of rent payable at any later period during the
tenancy, the additional amount is a Prohibited Payment.
Increases or reductions of rent are allowed where it is set out in the
tenancy agreement or by agreement between the landlord and
tenant after the tenancy has started.
TENANCY DEPOSIT
A Tenancy Deposit is money held by the landlord (or agent acting
on the landlord’s behalf ) as security during the period of the
tenancy and reserved for any damages or defaults by the tenant.
Tenancy Deposits are capped at five weeks’ rent where the annual
rent in respect of the tenancy immediately after its grant, renewal
or continuance is less than £50,000 a year and six-weeks’ rent where
the annual rent in respect of the tenancy immediately after its
grant, renewal or continuance is £50,000 or more a year.
Taking more than what is allowed in either case would mean that
the amount in excess is a Prohibited Payment.
A tenant can use a Tenancy Deposit Replacement Scheme (see
below) providing the tenant also has the choice of a five- or six-
week product.
HOLDING DEPOSIT
A Holding Deposit is a payment made by a tenant to a landlord (or
to an agent acting on the landlord’s behalf ) to reserve that property.
If the amount of Holding Deposit exceeds one week’s rent, the
amount of the excess is a Prohibited Payment. One week’s rent
means the amount of annual rent payable in respect of the tenancy
immediately after its grant, renewal or continuance divided by fifty-
two.
PAY M E N T S I N T H E E V E N T O F A D E FAU LT
Landlords and letting agents may require a tenant to make a
payment in the event of a relevant default. A relevant default means:
1. The loss of a key to, or other security device giving access to, the
property to which the tenancy relates.
2. Failure to make a payment of rent in full only before the end of 14
calendar days beginning with the date the rent is due as written in
the tenancy agreement.
PAY M E N T O N VA R I AT I O N , A S S I G N M E N T O R N O VAT I O N
OF A TENANCY
When a tenant has requested it, landlords and letting agents can
charge to vary, assign or replace a tenancy. The payment cannot
exceed £50 (including VAT) or the reasonable costs of the person
to whom the payment is to be made in respect of the variation,
assignment or novation of a tenancy. Any amount in excess is a
Prohibited Payment. Agents should provide evidence by receipts or
invoices that demonstrate anything in excess of £50.
PAY M E N T O N T E R M I N AT I O N O F A T E N A N C Y
Landlords and letting agents can require a tenant to make a payment
for an early termination (surrender) of the tenancy agreement at
the tenant’s request. The payment cannot exceed the loss suffered
by the landlord or reasonable costs incurred by the letting agent.
PAY M E N T S I N R E S P E C T O F CO U N C I L TA X
A payment to a billing authority in respect of Council Tax is a
Permitted Payment and letting agents and landlords may require
tenants to pay the Council Tax on the property they rent.
PAY M E N T S F O R U T I L I T I E S
A payment for or in connection with the provision of a utility is a
Permitted Payment if the tenancy agreement requires the payment
to be made. In the Tenant Fees Act, utility, means electricity, gas or
other fuel, water or sewage.
PAY M E N T S F O R A T E L E V I S I O N L I C E N C E
A payment to the British Broadcasting Corporation (BBC) in respect
LANDLORD LEGISLATIVE UPDATE 2019 • 6