Anything not permitted, that the tenant (or someone acting on their behalf like a guarantor or parent) is required to pay as a condition of the ‘grant, continuance, assignment, termination or renewal’ of an assured shorthold tenancy or licence agreement.
This includes payments to third parties, either for services throughout the tenancy or for specific performance of a job and loans from third parties.
In short this means that pretty much any fee that is in the tenancy agreement will be void unless it is exempt.
Examples of banned fees then would be:
Holding deposits, rent, deposits and charges for defaulting on the contract are all exempted from this ban.
However, all four are subject to additional restrictions as part of the legislation and landlords will need to be mindful of these changes.
In addition, most required payments to third parties are prohibited, however, a landlord can require the tenant to use a specific utility or communications provider. Agents are not allowed to require this however.
Finally, landlords may charge for changing tenants or allowing tenants to vacate the property early. This is subject to restrictions on costs however.
The Act has come about as a result of pressure being applied to politicians to improve the circumstances of renters, given the large increase in numbers of people renting in the UK. Certain agencies have been seen to abuse their position and charge particularly onerous fees to tenants in return for very little, such as simply renewing a tenancy agreement. The ban is intended to counteract this type of practice.
The aim of the Act is to reduce the costs that tenants can face at the outset, and throughout, a tenancy, and is part of a wider package of measures aimed at rebalancing the relationship between tenants and landlords to deliver a fairer, good quality and more affordable private rented sector.
Tenants will be able to see, at a glance, what a given property will cost them in the advertised rent with no hidden costs. The party that contracts the service – the landlord – will be responsible for paying for the service, which will help to ensure that the fees charged reflect the real economic value of the services provided and sharpen letting agents’ incentive to compete for landlords’ business.
Top Tips From Gertie Owen
Professional landlord and
‘Landlord of the Year’ winner
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