A rental sector expert says that landlords and letting agents must be fully aware of the implications of the Tenancy Fees Bill when it becomes law on 1 June – in particular its impact on Section 21 eviction notices.
The new bill was first discussed at the Budget in 2016 and is intended to reduce costs for tenants renting private property in the UK by removing letting agency fees, capping tenancy deposits and making the whole process more transparent. All landlords have had to comply with Section 21 rules, covering ‘no fault’ evictions, since the start of October last year.
Andrew Turner, chief executive at specialist buy-to-let broker Commercial Trust Limited, warns of detail in the new laws that require careful attention. While the ban on fees initially applies to tenancy renewals and new tenancies and excludes statutory and contractual periodic tenancies that arise after 1 June, the fees ban will be applicable to pre-existing tenancies from June 2020.
“From that date, any clauses in the agreement that permitted subsequently outlawed charges, will become ineffective. In the context of Section 21, this is essential information,” says Mr Turner.
“After that date, if a landlord or agent makes a charge that relates to a banned fee, they must return this within 28 days, or it will be considered unlawful and will render a Section 21 ineffective. It should also be noted that the new rules only apply to assured shorthold tenancies, student accommodation and licenses.
“It is important for landlords and letting agents to fully understand the implications of the Tenant Fees Bill in the context of affected tenancy agreements and Section 21. It’s worth spending some time to review existing tenancy agreements and templates to ensure that these will remain fit for purpose after 1 June.”
The Residential Landlords Association list the following as examples of banned fees:
- 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 have specific insurance providers
- Gardening services
Under Section 21, landlords must give tenants at least two months’ notice to leave a property once the fixed term has ended, but they are not required to give a reason for the eviction. All landlords must also complete a Form 6A in order to serve a Section 21 notice, but they can’t serve it within the first four months of the start of an AST – and a Section 21 notice expires once six months has passed from the date of it originally being served.
Further to this, all landlords must issue their tenants with the government’s “How to Rent” guide, as well as provide an up-to-date energy performance certificate (EPC) and gas safety certificate before the start of the tenancy.
If a local authority has deemed that the property requires repairs or maintenance, a Section 21 notice cannot be served, which is in place to protect tenants from “retaliation evictions” where a landlord tries to turf out a tenant because they’ve made complaints over the state of their property.
