Sections 1 and 2 of the Tenant Fees Act 2019 (TFA 2019) prohibit landlords and letting agents from requiring certain payments (fees) to be made by a tenant, or someone acting on the tenant's behalf in connection with a tenancy of housing in England.
The TFA 2019 doesn't prohibit all fees. A landlord or letting agent can only require fees that are included in the permitted payments schedule of the TFA 2019.
Types of tenancies the TFA 2019 applies to
The TFA 2019 applies to the following, regardless of start date:
- an Assured Shorthold Tenancy (AST), except a tenancy of social housing or a long lease
- lettings for student accommodation
- licences to occupy housing
Any terms within tenancy agreements requiring a prohibited payment have no legal effect. This means that a tenant will not be bound by that term.
Permitted payments
The permitted payments are:
- rent
- refundable tenancy deposit
- refundable holding deposit
- default fees (lost key or other security device, or late or unpaid rent)
- contract variation, assignment or novation (at tenant's request)
- early termination (at tenant's request)
- council tax and utility bills
- television licence
- communication services
You can find a full explanation of the permitted payments in Schedule 1 of the TFA 2019.
Prohibited payments
If the fee you want to require in connection with a tenancy is not within the permitted payments list, it's a prohibited payment.
Prohibited payments are likely to include, but are not limited to:
- administration fees
- application fees
- credit check fees
- inventory charges
- referencing fees
- guarantor fees
As a letting agent, you should not require these fees or include them in your:
- tenancy agreements
- published list of fees
- property adverts
Go to Breaching letting agency legislation for more information on what happens if you require tenants to make a prohibited payment.
Rent is a permitted payment. It is usually paid in regular payments, calculated in equal instalments, over the duration of the tenancy.
Additional charges to rent are not permitted, unless the tenant agrees to them after the tenancy agreement is in place and existing rules are complied with.
If the annual rent is less than £50,000, a tenancy deposit is capped at no more than 5 weeks' rent.
If the annual rent is £50,000 or more, the tenancy deposit is capped at 6 weeks' rent.
Any amount above these thresholds paid as a tenancy deposit is a prohibited payment.
One week's rent is the amount of the annual rent payable in respect of the tenancy immediately after its grant, renewal or continuance divided by 52.
So, for example, if the monthly rent was £624, the weekly rent would be (£624 X 12)/52 = £144
A tenancy deposit paid in respect of a shorthold tenancy must be protected in an approved tenancy deposit scheme. Information about the scheme must be provided to the tenant.
You can ask a tenant to pay a holding deposit before signing a tenancy agreement. A holding deposit is a payment made by or on behalf of a tenant to a landlord or agent to ‘reserve' that property. The holding deposit demonstrates a tenant's intention to rent a certain property. Acceptance of a holding deposit confirms the landlord or letting agent's intention to accept an individual as a tenant, subject to the satisfactory completion of reference checks.
A holding deposit is capped at no more than one week's rent. If the holding deposit is more than one week's rent, the amount of the excess is a prohibited payment.
One week's rent is the amount of the annual rent payable in respect of the tenancy immediately after its grant, renewal or continuance divided by 52.
Schedule 2 of the TFA 2019 sets out the rules on how the holding deposit should be treated.
The holding deposit must be refunded to the tenant:
- within 7 days of the tenancy starting
- within 7 days of the date the landlord decides, before the deadline for the agreement, not to enter into the tenancy agreement, or
- within 7 days of the deadline for the agreement, if the landlord and tenant fail to enter into a tenancy agreement
Tenants can agree to put the holding deposit towards:
- the first payment of rent
- the tenancy deposit
You must make sure that doing this, combined with other sums paid, does not exceed the imposed caps.
You cannot take multiple holding deposits for the same property at the same time. If you do, these would be prohibited payments.
In specific circumstances, as defined in Schedule 1, paragraph 3(5) of the TFA 2019, it may be permissible to retain an earlier holding deposit. If this is the case, a subsequent holding deposit would not be considered a permitted payment.
If you have the right to retain a holding deposit, this right is forfeited if the person who paid it is not given a written notice explaining the reason you're keeping it.
The written notice must be given within 7 days beginning with the:
- date that the landlord or letting agent decides not to enter into the tenancy, or
- deadline for the agreement where the landlord and tenant fail to enter the tenancy
A landlord or letting agent is permitted to require a payment in the event of a relevant default by the tenant if the tenancy requires the payment to be made.
The Tenant Fees Act specifies the permitted default fees.
Lost keys or other security device
A landlord or letting agent can claim the reasonable cost incurred for a replacement key or other security device.
You must give the tenant written evidence, for example a receipt, for the amount charged. Any amount considered to be in excess of what is reasonable is a prohibited payment.
Unpaid rent
A landlord or letting agent can apply interest to rent that is unpaid for a period in excess of 14 days. Interest is calculated daily.
The interest must be no more than 3% above the Bank of England's base rate, for each day the rent is outstanding.
Find the Bank of England base rate of interest.
Any amount in excess of this amount is a prohibited payment.
For example, if the Bank of England base rate is 0.25%, any amount of interest in excess of 3.25% of the unpaid rent amount is a prohibited payment.
The tenancy agreement must clearly state that rent arrears and interest will be payable.
Damages
A landlord or letting agent still has the right to seek damages for a breach of the tenancy agreement, for example if the tenant causes damage or breaks anything. The tenancy agreement must clearly state the landlord or letting agent can seek damages in this situation.
Further information regarding claims for damages are within the Tenant Fees Act 2019 guidance.
If the tenant asks to change the tenancy agreement, the landlord or letting agent can charge the tenant for the work involved in making this change.
Changes to the tenancy agreement include:
- to allow a pet to be kept at the property
- the remaining tenants bringing in a replacement tenant, if one of the tenants has left
- adding an extra person to the tenancy, for example a partner moving in
This payment can be no more than £50 or the reasonable costs incurred (if higher) as a result of the change. Anything over this is a prohibited payment.
The tenant may request to leave the tenancy early, such as:
- within the fixed term of the tenancy
- without giving the correct notice period, during a periodic tenancy
If the tenant decides to leave the tenancy early:
- the landlord is entitled to charge a fee for the actual loss they incur as a result of the early termination by the tenant
- the letting agent may charge a fee to cover reasonable costs they've incurred in arranging the early termination of the tenancy
Any fee charged by the landlord above the actual loss they've incurred, or by the letting agent above their reasonable costs, is a prohibited payment.
The Ministry of Housing, Communities and Local Government (MHCLG) guidance for landlords and agents states that:
- if a landlord agrees to a tenant leaving early, they can ask the tenant to pay rent as required under their tenancy agreement until a suitable replacement tenant is found
- where a suitable replacement tenant is found and the landlord has agreed to an early termination of the tenancy, the landlord can only charge the tenant rent until the new tenancy has started
Tenants are responsible for the payment of their bills, if these are not included within their rent. Payments for utilities, broadband, TV, phone and council tax are all excluded from the ban on prohibited payments.
Council tax
A payment to a billing authority in respect of council tax is a permitted payment.
Utilities
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.
This also includes green deal payments within the meaning of section 1 Energy Act 2011.
Utility means electricity, gas or other fuels, water or sewerage.
Television (TV) licence
A payment to the BBC in respect of a TV licence is a permitted payment if the tenancy agreement requires the payment to be made.
Communication services
A payment for or in connection with the provision of a communication service is a permitted payment if the tenancy agreement requires the payment to be made.
Communication service means a service enabling the use of:
- phone (other than a mobile telephone)
- the internet
- cable television
- satellite television
The Ministry of Housing, Communities and Local Government (MHCLG) has guidance on the Tenant Fees Act 2019. The guidance has detailed explanations and examples of the fees that can and cannot be charged in relation to a tenancy.
If you're not sure about the fees you charge your tenants or their representatives, you can get advice from:
- your local authority trading standards service
- your local authority housing team
- Business Companion
- your professional body or trade association
- an independent legal adviser