New UK tenancy rules are hitting letting agents hard
Tenants Fees Act 2019 restricts landlords from charging tenants additional fees.
Recently introduced legislation in the UK is having an adverse effect on business for letting agents and landlords, according to new research. Following the Tenants Fees Act 2019, tenants are no longer required to pay their landlords additional fees for things like referencing, credit checks, inventories, and right to rent checks. The rules apply to tenancy agreements signed after June 1, 2019 – while from June 1, 2020, they will apply to all private assured short-term lease agreements, even those entered before June 2019.
Aside from rent, landlords are now only permitted to charge tenants for the following:
- Refundable capped tenancy deposit (maximum of five week’s rent unless the annual rent exceeds £50,000
- Holding deposit (up to a maximum of one week’s rent), which should be refundable unless the tenant pulls out of the tenancy
- Payments for early termination of tenancy (when requested by the tenant)
- Default payments for replacing lost keys or late payment of rent
- Landlords are entitled to reimbursement if they pay bills on behalf of the tenant, including TV license, utilities, and council tax
- Damages for breach of agreement
The above are the only fees a landlord can charge. As a result, they are no longer able to state – either at the onset or renewal of a tenancy agreement – that the tenant is required to pay a sum for the letting agent’s costs, which has been common practise in the past.
If a landlord charges a tenant for something outside of the permitted fees after the relevant date, they will not be able to evict them until the unlawful payment has been completely refunded. Landlords need to be weary that if they breach the new law once, they could be hit with a £5,000 fine, while any subsequent breaches within five years can result in an unlimited fine.
Due to this, 31% of letting agents surveyed claim they have lost up to 20% of their revenue, while 28% say their agencies have lost up to 10% of their revenue. Other agents argue that they’ve been hit even harder, with 17% reporting revenue losses of between 21-30%, while 10% claimed they’ve lost more than 30%. Only 15% of agents said their revenues had not been affected by the changes.
UK lettings platform Goodlord carried out the research and says: “With further pieces of key legislation due in 2020 and beyond, it’s essential that agents stay nimble and prepare their business models for more change to ensure they continue to prosper this decade.