Kenricks Property Management Update -

1. Tenant Fee Ban

From June 1st 2019, landlords and agents are no longer able to charge a number of fees in England for new tenancies signed on or after that date.

The tenant fees ban is wide ranging and will effectively bar most fees from being charged. Landlords and agents will only be able to charge for payments defined as permitted in the legislation.

What fees are prohibited?

Anything not permitted, that the tenant (or someone acting on their behalf like a guarantor or parent) is required to pay as a condition of the 'grant, continuance, assignment, termination or renewal' of an assured shorthold tenancy or licence agreement.

This includes payments to most third parties, either for services throughout the tenancy or for specific performance of a job and loans from third parties.

Examples of banned fees then would be:

  • Charging for a guarantor form
  • Credit checks
  • Inventories
  • Cleaning services
  • Referencing
  • Professional cleaning
  • Having the property de-flead as a condition of allowing pets in the property
  • Admin charges
  • Requirements to pay for an insurance provider
  • Gardening services

In short this means that pretty much any fee that is in the tenancy agreement will be void unless it is listed as a permitted payment.

What fees are permitted?

Holding deposits, rent, deposits and charges for defaulting on the contract are all exempted from this ban.

However, all four are subject to additional restrictions as part of the legislation and landlords and agents will need to be mindful of these changes.

In addition, most required payments to third parties are prohibited, however a landlord can require the tenant to use a specific utility or communications provider.

Finally, landlords may charge for changing tenants, varying the tenancy or allowing tenants to vacate the property early. This is subject to restrictions on costs however.

Restrictions on rent

There will be a prohibition on setting rent at a higher level for the first portion of the tenancy and then dropping it down afterwards. This is to prevent landlords or agents trying to offset the ban on fees by artificially increasing the rent for the initial period to make up the costs. If the rent is artificially inflated in this manner, then the amount above the lowest rent level will be prohibited.

Of course, a higher rent than you would normally charge for the property, that is consistent throughout the tenancy will be fine. The government believes this is unlikely to happen though, as tenants will shop around for the lowest price.

Holding Deposits

Holding deposits are limited to a maximum of 1 week's rent and subject to statutory legislation on the repayment of this should the tenancy not go ahead.

Holding deposit time frames

The landlord has 15 days to make a decision once a holding deposit is taken. This can be extended if both parties agree to a date in the future.

Once a decision is made, the landlord or agent must notify the applicant of the decision within 7 days. This should set out whether the holding deposit will be refunded in full or whether any of it will be retained.

2. Client Money Protection (CMP)

From April 1st 2019, all letting agents in England were required to belong to a client money protection scheme when they are holding client money. This provides insurance to landlords and tenants in the event the agent steals money from their clients.

Kenricks Property Management has submitted an application to join a Client Money Proection Scheme ofered by a company called Money Shield.  Money Shield (CMP) scheme enables lettings and estate agents to reassure tenants, landlords, buyers and vendors that their money is safe. If your agent has misappropriated your money, contact Money Shield to make a claim. Money Shield will step in to reimburse landlords and tenants should a property agent misappropriate rent, deposit or other client funds.

Thousands of Lettings Agents do not protect their Clients’ Money so make sure your agent has CMP. Money Shield offers the peace of mind that your money is protected if the unthinkable happens. If your rent or maintenance funds go missing due to theft or your agent goes bust, your money will be reimbursed quickly without any hassle.

Applying to have missing money reimbursed is simple with Money Shield. As long as it has been reported to the police you can simply fill out our claim form to get your money reimbursed. However claims seldom happen against Money Shield agents as we continually make checks to ensure your money is being held in a separate client account.