On June 1st 2019 the world of renting became significantly cheaper for tenants after new legislation went live restricting what tenants can be charged by letting agents and landlords.

That's when the Tenant Fees Bill became law in England. It says that any renter starting a new tenancy on or after June 1st 2019 cannot be charged fees for moving into a property, living it, or when they move out.

The only exceptions to this rule are the monthly rent, the rental deposit, a refundable holding deposit, default fees (such as if you lock yourself out and a locksmith needs to be called) and any permitted items included in the rental contract such as all-inclusive utilities, for example, or council tax

Rejoice, we hear you say. These fees often ran into hundreds of pounds (£300 on average, the government reckons) and were charged before, during and at the end of tenancy. This, many tenants have argued, can make moving home and living in properties within the private rented market very expensive.

But despite the best efforts of MPs to draft the new law to make it watertight, straightforward and easy to understand, there are some grey areas that might lead agents or landlords to mistakenly charge banned fees. These are:

Referencing

Most landlords and letting agents ask tenants to provide a reference before they move in. Because the tenant fees ban now prevents agents or landlords charging tenants for this, you may have to provide the relevant information yourself (such as a reference from your most recent landlord, three months' payslips, an employer reference detailing length of employment and salary, proof that you pay your rent on time and a copy of your credit score).

But if you have a low credit score or you have not rented a property before, referencing can be problematical.

CreditLadder can help. We’ve launched a paid-for service that will enable tenants to show a prospective landlord that they’ve paid their rent on time in the past.

Click here to register your interest.

Holding deposits

You can be charged a holding deposit by a letting agent to reserve a property and take it off the market.

It’s a reasonable request to prove that you’re serious about renting the place, and prevents counter-offers by other tenants being made. It’s now capped by law at one week’s rent and, once you move in, should be refunded.

Most agents just deduct it from your tenancy deposit, but it must be returned to you within seven days of the tenancy starting. Also, the landlord/letting agent must sign the tenancy agreement with you within 15 days of the holding deposit being paid or return it.

But…

Remember that although it’s called refundable, if you pull out of the deal without good reason, you’ll lose the deposit.

Default fees

These are fees that a landlord or agent can charge if you ask to change something during the tenancy. The fees include:

Ask for new keys: Your agent or landlord can charge ‘reasonable costs’ for doing work to remedy mistakes you make. If you lose your keys, or a bank bounces your BACS rent payment because you’ve gone too overdrawn, reasonable charges means the costs of chasing you up, going to a key cutting shop and so on.

But…

This is a grey area; what is a ‘reasonable cost’? The new law says landlords and agents must provide receipts and details of how long a job took and what their hourly rate or standard charges are. It’s a good idea to ask your agent or landlord about this list before you move in.

Altering your tenancy

If you want to change the terms of your existing tenancy and for example have a pet allowed, or add a person to a contract that’s joint and several (see our explanation of this) then you can be charged for the work to do this. It can’t exceed £50 and although this sounds a lot for a few minutes’ work, remember that until recently some agents charged much more for this service.

Leaving a tenancy early

Most Assured Shorthold Tenancy agreements have a minimum length of at least six months and if you try to leave the tenancy before this date, then this is treated as a ‘default’ and you may have to pay both a fee and the outstanding rent owed for the rest of the minimum period. For example, if you pay £500 a month and leave after three months then you could be charged £1,500 plus a fee to process the payment and deal with the paperwork. But the fee must be ‘reasonable’.

Been binned

There a handful of fees that the law doesn’t tackle. For example, if your wheelie bins are stolen (yes, it does happen) and the local authority charges £50 to replace it then who pays? It’s not your fault but the property needs a rubbish bin. The managing agent can’t claim it’s a ‘default’ fee. Do they pay for and organise the bin’s replacement? The law isn’t clear on this.

Pets

Some landlords allow tenants to keep pets but ask them to pay a range of different fees including a ‘pet deposit’ and a fee for deep-cleaning the property when they move out. Both these fees/charges are not allowed under the fees ban legislation.

Some campaigners argue this will make renting out properties to pet owners harder in the future and put off tenants. The only way around the problem is for the tenant to be charged a higher rent by the landlord and for the agreement to be informal rather than contractual. It’s far from ideal.

Permitted payments

Some properties are rented by landlords with everything included in one monthly payment. So on top of the rent, you may agree to pay for gas, electricity, broadband, TV licence and/or council charges all rolled into one payment, but itemised separately.

PLEASE NOTE:

This guide is about recently introduced English tenant fees ban. An almost identical version also recently went live in Wales while Scotland already operates a fees ban.

Also, on June 1st 2019 the fees ban only applies to NEW contracts, not existing ones. On June 1st 2020 the law then applied this to EVERY tenancy regardless of when it started.

CreditLadder can help you improve your credit score

If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.

CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the information provided in this article is for information purposes only and should not be considered as advice.