Which Rental Fees Are Illegal in the UK?

Navigating the rental market in the UK can be a complex affair, and understanding your rights as a tenant is crucial. One area where confusion often arises is around rental fees. The Tenant Fees Act 2019 significantly reformed the landscape, outlawing most of the fees that landlords and letting agents could previously charge. This article delves into the specifics of which rental fees are illegal in the UK, ensuring you are well-informed and protected from unlawful charges.

The primary piece of legislation governing rental fees in England is the Tenant Fees Act 2019. While this act applies to England, other parts of the UK have their own regulations. However, the principles are largely similar, aiming to protect tenants from excessive and unjustified costs. This guide will focus on the rules applicable in England, with notes on how they might differ elsewhere.

Understanding the Tenant Fees Act 2019

The Tenant Fees Act 2019 came into effect on 1 June 2019, and it banned most fees that landlords and letting agents in England could charge tenants. The aim was to make renting fairer and more transparent by reducing the upfront costs tenants often faced. Before this act, tenants could be subjected to a wide array of fees, from administration charges to referencing fees, which often amounted to hundreds of pounds.

The Act defines a “prohibited payment” as a payment that a landlord or letting agent must not charge a tenant in connection with a tenancy. It also outlines “permitted payments,” which are the only fees that can legally be charged. Understanding this distinction is key to identifying illegal rental fees.

Prohibited Fees: What Landlords Cannot Charge

The Tenant Fees Act 2019 lists a comprehensive set of fees that are now illegal to charge tenants in England. These include, but are not limited to:

• Administration Fees: This was a common fee charged for general administrative tasks, such as setting up the tenancy, referencing, or processing applications. These are now illegal.
• Referencing Fees: Charges for checking your credit history, employment status, or previous landlord references are prohibited.
• Inventory Fees: Landlords and agents cannot charge tenants for creating or checking an inventory of the property’s contents and condition at the start or end of the tenancy.
• Gardening Fees: If the tenancy agreement requires the tenant to pay for gardening services, this is now illegal.
• Professional Cleaning Fees: Charging tenants for professional cleaning at the end of the tenancy is prohibited, unless it’s to restore the property to the condition it was in at the start of the tenancy, considering fair wear and tear.
• Viewings Fees: Fees for conducting viewings of the property are illegal.
• Tenancy Agreement Fees: Charges for drafting or renewing a tenancy agreement are banned.
• Credit Check Fees: Similar to referencing fees, any charge for checking your credit score is illegal.
• Pet Fees: Landlords cannot charge an additional fee specifically for having a pet. However, they can request a higher deposit if they agree to a pet, within the overall deposit cap.
• Set-up Fees: This is a broad category that covered various charges associated with setting up a new tenancy.
• Exit Fees: Fees charged when you leave the property, other than deductions for damages or unpaid rent (subject to the deposit rules), are illegal.
• Guarantor Referencing Fees: If your guarantor needs to be referenced, the landlord or agent cannot charge your guarantor for this.

It’s important to note that if a landlord or letting agent charges any of these prohibited fees, they are in breach of the Tenant Fees Act 2019 and could face penalties.

Permitted Fees: What Landlords Can Legally Charge

While most fees are now banned, the Tenant Fees Act 2019 does allow for certain payments to be charged. These are strictly defined and limited. If a landlord or agent charges for anything outside these categories, it is likely illegal.

Permitted Payments Explained:

• Rent: This is the most obvious and fundamental payment, and it remains permissible.
• Tenancy Deposit: A deposit can be charged, but it is capped. For tenancies where the annual rent is less than £50,000, the deposit is capped at five weeks’ rent. If the annual rent is £50,000 or more, the cap is six weeks’ rent. This deposit must be protected in a government-approved scheme.
• Holding Deposit: A landlord or agent can ask for a holding deposit to reserve a property. This is capped at one week’s rent. It must be returned to the tenant within seven days of the tenancy starting or within seven days of a decision not to proceed with the tenancy, unless specific conditions are met for keeping it (e.g., tenant withdrawing or providing false information).
• Payments for Changes to the Tenancy: If a tenant requests a change to the tenancy agreement, such as adding a name to the tenancy or changing the pet policy, the landlord can charge a reasonable fee, capped at £50 (or the cost of the landlord’s reasonable expenses if higher, but this must be evidenced).
• Payments for Early Termination of the Tenancy: If a tenant wishes to leave the tenancy early, and the landlord agrees, the tenant may be liable for the landlord’s costs in re-letting the property. This includes rent until a new tenant is found or until the end of the fixed term, whichever comes first, and any reasonable costs incurred by the landlord, such as advertising.
• Utilities, Communication Services, TV Licence, and Council Tax: Tenants are responsible for paying for these services as part of their tenancy, unless otherwise agreed.
• Default Fees: If a tenant is late paying rent, a landlord can charge interest on the overdue rent. This interest can only be charged if the rent is more than 14 days overdue and is capped at 3% above the Bank of England base rate. Also, if a tenant loses a key and requires a replacement, a reasonable charge can be made for this.

It is crucial for tenants to understand that even for permitted payments, there are often caps and specific conditions attached. For instance, the deposit protection rules are stringent and must be followed.

What About Other Parts of the UK?

While the Tenant Fees Act 2019 is specific to England, similar legislative changes have been implemented in other parts of the UK to protect tenants.

Scotland

In Scotland, the Scottish Government introduced the Private Tenancies (Scotland) Act 2016. This legislation banned most upfront fees charged by letting agents and landlords to tenants. Similar to England, fees for referencing, administration, and inventory checks are generally not permitted. The focus is on ensuring tenants only pay for rent and their deposit.

Wales

In Wales, the Renting Homes (Fees etc.) (Wales) Act 2019 came into effect on 1 September 2019. This act also prohibits most fees charged to tenants, with a similar list of permitted payments to England, including rent, deposits (capped), holding deposits (capped), and reasonable charges for changes to the tenancy or early termination.

Northern Ireland

Northern Ireland’s regulations are slightly different. While there isn’t a direct equivalent to the Tenant Fees Act 2019, the Consumer Rights Act 2015 and existing tenancy deposit protection schemes provide some protection against unfair fees. It’s advisable for tenants in Northern Ireland to check specific tenancy agreements and seek advice from tenant support organisations.

Illegal Fees: Red Flags for Tenants

As a tenant, you should be vigilant and aware of potential illegal fees. Here are some common red flags:

• Being asked for fees not listed in the permitted payments: If a landlord or agent requests money for something other than rent, deposit, holding deposit, or the specific exceptions mentioned, it’s a strong indicator of an illegal fee.
• Unclear or vague fee descriptions: If the purpose of a fee is not clearly explained or seems like a catch-all “administration fee,” it’s likely illegal.
• Fees exceeding the statutory caps: For holding deposits and tenancy deposits, ensure they do not exceed the legal limits.
• Pressure to pay fees upfront before viewing or signing: While holding deposits are permissible, you should not be pressured into paying large sums for unspecified services.
• Fees for services that are the landlord’s responsibility: For example, if the landlord is obligated to maintain the property, they cannot charge you for routine maintenance under the guise of a fee.

What to Do If Charged an Illegal Fee

If you believe you have been charged an illegal rental fee, you have several options:

1. Discuss with Your Landlord or Letting Agent

Your first step should be to calmly and clearly explain to your landlord or letting agent why you believe the fee is illegal, referencing the relevant legislation (e.g., the Tenant Fees Act 2019 in England). Provide them with information about the permitted and prohibited fees.

2. Seek Advice from Tenant Organisations

Numerous organisations offer free advice and support to tenants. These include:

• Citizens Advice
• Shelter
• Your local council’s housing advice service

These organisations can help you understand your rights and the best course of action.

3. Report to Trading Standards

Local authority Trading Standards services are responsible for enforcing the Tenant Fees Act 2019 in England. If your landlord or letting agent refuses to refund an illegal fee, you can report them to Trading Standards. They have the power to issue fines to landlords and agents who breach the Act.

4. Take Legal Action

In some cases, you may be able to take legal action to recover illegal fees. This is usually a last resort and may involve small claims court. Seeking legal advice is essential before proceeding down this route.

Impact of the Tenant Fees Act on the Rental Market

The Tenant Fees Act 2019 has had a significant impact on the UK rental market. Landlords and letting agents have had to adapt their business models, and tenants have benefited from reduced upfront costs. This legislation has contributed to greater transparency and fairness, making renting more accessible for many.

However, it’s important to note that while the Tenant Fees Act banned most upfront fees, some costs have been shifted. For example, some landlords might increase rent to offset the loss of fee income, though this is not always the case and is subject to market conditions and rent caps in some areas. Tenants should always scrutinise the total cost of renting, not just the individual fees.

The legislation also introduced new responsibilities for landlords and agents, such as clearly displaying their fee structure and providing tenants with clear information about what they can and cannot be charged. Non-compliance can lead to substantial penalties, acting as a deterrent against illegal practices.

Conclusion

Understanding which rental fees are illegal in the UK is vital for protecting your rights as a tenant. The Tenant Fees Act 2019, along with similar legislation in Scotland and Wales, has largely eliminated the practice of charging tenants for services that were previously common but often unjustified. While a few permitted fees exist, such as rent, capped deposits, and holding deposits, any other charge should be viewed with suspicion. Always familiarise yourself with the regulations applicable in your region, seek advice if you are unsure, and do not hesitate to challenge any unlawful fees. By staying informed, you can ensure a fair and transparent rental experience.