Tenant Fees Act 2019

Overview of the Act

1. Through this Act, the Government aims to make renting fairer and more affordable for tenants by reducing the costs at the outset of a tenancy. This Act also aims to improve transparency and competition in the private rental market. The Act implements the commitment to ban letting fees paid by tenants in England and includes other measures to improve fairness, competition and affordability in the lettings sector.
2. This Act seeks to achieve the above by banning landlords and their agents from requiring tenants and licensees of privately rented housing in England and persons acting on their behalf or guaranteeing their rent (together referred to as "relevant persons") to make any payments in connection with a tenancy with the exception of:
   • the rent;
   • a refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent for the property is less than £50,000 and no more than six weeks’ rent where the annual rent for the property is £50,000 or more;
   • a refundable holding deposit (to reserve a property) capped at no more than one week’s rent;
   • payments in the event of a tenant losing their key, losing a security device giving access to housing or paying rent more than 14 days late (default payments);
   • certain payments on assignment, novation or variation of a tenancy when requested by the tenant capped at £50, or reasonable costs incurred if higher;
   • payments associated with early termination of the tenancy, when requested by the tenant; and
   • payments in respect of utilities, communication services, television licence and council tax.
3. In the Act "in connection with a tenancy" includes when the above are required:
   • by a landlord in consideration of the grant, renewal, continuance, variation, novation, assignment or termination of a tenancy;
   • by a letting agent in consideration of arranging the grant, renewal, continuance, variation, novation, assignment or termination of a tenancy;
   • on entry into a tenancy agreement containing relevant provisions;
   • pursuant to a provision of a tenancy agreement that requires, or purports to require, the person to do any of those things in the event of an act or default of the relevant person or if the tenancy is varied assigned, novated or terminated;
   • pursuant to an agreement relating to such a tenancy with a letting agent which requires, or purports to require, the person to do any of those things in the event of an act or default of the relevant person or if the tenancy is varied assigned, novated or terminated;
   • as a result of an act or default related to the tenancy or agreement with a letting agent unless pursuant to, or for breach of, the tenancy agreement or agreement; and
   • in consideration of providing a reference for a former tenant.
4. The ban applies in relation to assured shorthold tenancies, tenancies of student accommodation and licences to occupy. In this memorandum "tenant" includes licensees.
5. The Act bans landlords and their agents from requiring tenants and other relevant persons to secure and pay for services from any third party (other than landlords in relation to utilities and communication services) or to make a loan.
6. The definition of ‘relevant persons’ under this Act does not include local housing authorities, the Greater London Authority, or any person acting on their behalf.
7. The Act requires agents and landlords to refund the holding deposit except in circumstances where the tenant withdraws, fails a right-to-rent check or fails to take all reasonable steps to enter into the tenancy when the landlord or agent has done so. The agent or landlord may also retain the holding deposit if the tenant provides false or misleading information and the landlord is reasonably entitled to take into account that false or misleading information or the tenant’s behaviour in providing it in deciding whether to grant the tenancy because this materially affects their suitability to rent the property.
8. Landlords and agents can only accept one holding deposit at any one time unless otherwise permitted to retain an earlier deposit and must provide reasons in writing to the tenant or other relevant person if the holding deposit is retained.
9. The Act places a duty on trading standards authorities to enforce the Act but district councils that are not trading standards authorities will have power to enforce if they choose to do so. The Act also makes provision for tenants and other relevant persons to be able to recover unlawfully charged fees through the First-tier Tribunal and prevents landlords from recovering possession of their property via the procedure set out in section 21 of the Housing Act 1988 until they have repaid any prohibited payment or unlawfully retained holding deposit.
10. A breach of the fee ban will usually be a civil offence with a financial penalty of up to £5,000, but if a breach is committed within 5 years of the imposition of a financial penalty or conviction for a previous breach this will be a criminal offence. The penalty for the criminal offence, which will be a banning order offence under the Housing and Planning Act 2016, is an unlimited fine.
11. Where an offence is committed, local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution. In such a case, local authorities will have discretion about whether to prosecute or impose a financial penalty. Where a financial penalty is imposed instead of a prosecution this does not amount to a criminal conviction.
12. A breach of the requirement to repay a holding deposit will be a civil offence and will be subject to a financial penalty of up to £5,000.
13. Local authorities will be able to retain the money raised through financial penalties with this money reserved for future local housing enforcement.
14. The Act makes some amendments to the transparency requirements in Chapter 3 of Part 3 of the Consumer Rights Act 2015, which require an agent in England to display any relevant fees, the redress scheme of which they are a member and whether they have client money protection prominently in their office and on their website. The amendments made will apply those requirements in relation to property portals (e.g. Rightmove, Zoopla), to make new provision regarding fines in the event of a continuing breach of the requirements in England and to require letting agents to display the name of their Client Money Protection scheme.
15. The Act also amends the client money protection legislation as set out in Part 5 of the Housing and Planning Act 2016, the Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018 and the Client Money Protection Schemes for Property Agents (Requirement to belong to a Scheme etc) Regulations 2019.
16. Finally, the Act makes provision for the Secretary of State or a trading standards authority designated by the Secretary of State to be a Lead Enforcement Authority to provide oversight, guidance and support with the enforcement of requirements on letting agents. This includes the ban on letting fees and related provisions.
17. The proposals to ban letting fees were subject to a public consultation, which ran for 8 weeks from 7 April until 2 June 2017. The consultation received 4,724 responses from stakeholders across the private rented sector.
18. The Act was published in draft on 1 November 2017 and was subject to pre-legislative scrutiny by the Housing, Communities and Local Government Committee.1 The Committee published their report and recommendations on 29 March 2018 further to receiving over 60 written submissions and holding five oral evidence sessions with a range of stakeholders across the private rented sector.2
19. Note: In the following sections of these Explanatory Notes "tenancy" refers to assured shorthold tenancies, tenancies of student accommodation and licences to occupy but excludes long leaseholds, tenancies of social housing and holiday lets. "Landlord" and "tenant" have the corresponding meanings.