Letting a property used to involve a long list of fees tenants were expected to pay, from admin charges to referencing costs. However, that changed with the Tenant Fee Ban, officially known as the Tenant Fees Act 2019.
Knowing what you can and can't charge under the law is key if you're a landlord. You could face penalties or risk tenant disputes if you get it wrong. This guide breaks down the essentials to stay compliant and protect your rental income.
Key summary
- The Tenant Fees Act 2019 was enacted on 1 June 2019 and applies to Assured Shorthold tenancies in England, which will become Assured Periodic tenancies in England once the Renters’ Rights Bill becomes law.
- It bans most letting fees previously charged to tenants, including admin, credit checks and inventory costs.
- Security deposits are capped at 5 weeks’ rent for properties with annual rent under £50,000, and 6 weeks’ rent for properties at or above £50,000
- Holding deposits are limited to a maximum of 1 week’s rent
- Only a small number of permitted payments can be charged, such as rent, utilities and reasonable tenancy change fees
- Local councils and the Lead Enforcement Authority are responsible for enforcing the rules
- Deposits must be protected in a government-approved tenancy deposit scheme within 30 days
- Landlords and agents are legally required to give tenants clear information about their rights
What is the Tenant Fee Ban?
The Tenant Fee Ban, or the Tenant Fees Act 2019, transformed how landlords and agents can charge tenants in England. It was introduced to make the private rental market more transparent and affordable, especially at the start of a tenancy.
Background and legislative purpose
Before the act, tenants could be charged various upfront fees, from referencing charges to check-out costs. These fees varied across agents, making it difficult for renters to budget or compare properties fairly.
The government stepped in to fix this. The core aims of the legislation were:
- To improve fairness by removing surprise costs for tenants
- To create consistency in how tenants are charged
- To increase transparency in the rental process
- To shift responsibility for letting costs onto landlords and agents, rather than tenants
It’s worth noting that this legislation applies only in England. Scotland, Wales, and Northern Ireland have their versions of tenant fee regulations, so landlords operating across borders should check regional rules. In England, it applies to most, but not all, tenancies. If you let your property to a Company, for example, it may not apply, and charges will be permitted.
Related reading: Legal obligations landlords must follow under tenant rights
What fees are banned under the Tenant Fee Act?
The Tenant Fees Act 2019 made it illegal for landlords and letting agents in England to charge tenants many of the once-standard costs. These rules apply to Assured Shorthold tenancies, student rentals, and occupied licences and will soon apply to Assured Periodic tenancies, when the Renters’ Rights Bill is enforced.
List of prohibited fees
Landlords can no longer charge tenants for:
- Tenancy admin or application fees
- Referencing or credit checks
- Inventory reports at the start or end of the tenancy
- Check-in or check-out services
- Contract review fees
- Charges for printing or preparing tenancy documents
These fees were standard before 2019 but were banned under current law. Charging them now could result in fines or an order to repay the tenant.
Grey areas and misinterpretations
Not every cost is black and white. Some charges are misunderstood, and while they may seem reasonable, they can only be applied in specific ways.
For example:
- Lost keys: A replacement can be charged, but only for the exact cost of the item. You can’t round up or add a handling fee.
- Late rent: You may apply interest only if the rent is more than 14 days late and the rate is capped at 3% above the Bank of England base rate.
Can agents be allowed to charge admin fees?
No, they can’t. The Act bans all admin fees charged to tenants. That includes:
- Setting up or processing a tenancy
- Verifying ID or documents
- Reviewing a contract or preparing paperwork
These tasks are now part of a letting agent’s service to the landlord. If your agent still charges tenants for admin, they’re breaching the law, and you, as the landlord, could be held liable.
What fees are still allowed?
There’s a specific list of costs that landlords and agents are still legally allowed to pass on to tenants, but only under certain conditions.
Permitted charges
These are the principal payments that remain lawful:
- Rent: This is the primary payment and is not affected by the act. However, under upcoming renter reform proposals, landlords may no longer be able to ask tenants to pay rent upfront for extended periods. Keep an eye on legislative updates.
- Security deposits: You can still take a deposit, but it’s capped based on the rental value:
- Up to 5 weeks’ rent if the annual rent is under £50,000
- Up to 6 weeks’ rent if the annual rent is £50,000 or more
- Holding deposits: A holding deposit can be charged to reserve a property. Once the tenancy starts, this deposit is capped at one week’s rent and must be refunded or applied toward the rent or deposit.
- Changes requested by the tenant: If a tenant asks for changes to the tenancy (like replacing a named tenant or changing the rent due date), you can charge up to £50, or more if you can prove the cost is reasonable.
Fee caps and conditions
All permitted fees must meet strict conditions to remain compliant. However, they could still be challenged if they are excessive or not adequately documented.
For example:
- Deposits must be protected in a government-approved scheme within 30 days
- Holding deposits must be returned if the tenancy doesn’t go ahead due to delays from the landlord or agent.
- Change requests must be tenant-initiated; you can’t charge tenants for variations they didn’t ask for
Penalties for non-compliance
The Tenant Fees Act isn’t just guidance, it’s legally enforceable. If landlords or letting agents break the rules, they can face financial and legal consequences. The penalties escalate based on the severity and whether it’s a repeat offence.
- First offence: A civil penalty of up to £5,000
- Second offence within five years: Treated as a criminal offence, which may lead to:
- An unlimited fine
- A banning order preventing the landlord or agent from operating in the sector
- Entry onto the Rogue Landlord and Agent Database
Letting agents who breach the Act may also lose their client money protection or redress scheme membership, preventing them from legally trading.
Landlords should document all fees, ensure compliance from their agents, and seek expert advice when unsure. The cost of not doing so can far outweigh the effort required to stay compliant.
Staying compliant isn’t just about avoiding fines. It also builds trust with tenants, reduces disputes and protects your long-term rental income. Whether managing properties yourself or using a letting agent, you must ensure every charge is legal.
At Hamptons, we help landlords comply with the law. From understanding their legal duties to managing tenancies smoothly, our team makes compliance stress-free and straightforward.
Learn more: What do letting agents do for landlords?
Do you need guidance on legal compliance or tenant rights? Contact your local Hamptons branch today to stay informed and protected.
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