Changes in Residential Tenancy Law – Are you Prepared?

New legislation being brought into the private residential rental sector in England will see many landlords having to review their processes this summer. The changes to the law, being brought about under the Tenant Fees Act 2019, come into effect from 1st June 2019 and will place far more restrictions on landlords.

The overarching aim of the new legislation is to redress the balance between the landlord and tenant relationship, particularly in relation to the limits and types of payments that landlords can charge tenants as part of their tenancy. The Act restricts these to:

  1. a) the rent
  2. b) a refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above
  3. c) a refundable holding deposit (to reserve a property) capped at no more than one week’s rent
  4. d) payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
  5. e) payments associated with early termination of the tenancy, when requested by the tenant
  6. f) payments in respect of utilities, communication services, TV licence and council tax; and
  7. g) A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement

No other additional fees of any kind are permissible under the new Act.

Arguably the most significant change to be brought about by the legislation relates to deposit payments taken by landlords at the start of a tenancy. Government guidance on the new Act states that the ‘provision applies universally, regardless of circumstance’ and ‘there are no special provisions or exemptions’. Landlords that may have sought additional deposits from tenants with pets or from tenants that smoke will now be outlawed from doing so.

The new legislation applies to all assured shorthold tenancies (ASTs), tenancies of student accommodation and most licences to occupy housing in the private rental sector in England.

The changes to the law are being introduced in 2 stages and depend on the date a tenancy agreement is entered into. Any new tenancy agreement, student let or licence to occupy housing in the private rental sector starting on or after 1 June 2019 must adhere to the new rules.

The law will not apply retrospectively to any agreements in place before this and in the case of existing tenancies, landlords will still be able to charge fees until 31 May 2020 where they are required under the tenancy.

The second key date is 1 June 2020, from which the cap on fees applies to all applicable tenancies and licences to occupy housing in the private rental sector, whether newly entered into from that date or existing.

O’Donnell Solicitors is already working with a number of landlords of residential properties to make amendments to tenancy agreements in line with the new legislation. It is worth pointing out that a tough stance will be taken on landlords that fail to comply with the new law – with breaches likely to be classed as a civil offence with a penalty of up to £5,000. Landlords found to have committed further breaches within 5 years will be charged with a criminal offence, accompanied by an unlimited fine.

For further information on the new laws and what it means to you as a landlord or tenant of residential property in England, please get in touch with us.