A Guide to The Tenant Fees Act 2019 and The Home Act 2018

Mike Bracegirdle, Head of our Agriculture Department, examines the implications of the new Tenant Fees Act 2019 and The Home (Fitness for Human Habitation) Act 2018.

Tenant Fees Act 2019

On the 12^th February 2019, the Tenant Fees Act 2019 (TFA) was passed. This law commences from 1^st June 2019 and currently only applies to England. The Act was introduced for the purpose of banning letting fees paid by tenants in the private sector and imposing capped tenancy deposits.

The Act defines the Tenancy as;

Assured Shorthold Tenancies;
Licence (eg lodge or lettings); and
Student lettings

The Tenant Fees Act does not apply to:

Contractual tenancies which would be used if the tenancy is for a company let or if it’s not to be the individuals only or principal home for example.
Assured tenancies (where no section 21 notice is ever available to the landlord).

The introduction of this Act means careful planning for both landlords and their letting agents is required. We explain why;

Until TFA came into force, letting agents have been legally permitted to charge fees for administration, referencing and other costs incurred. However, there is an argument that these costs have been greatly inflated over time by some unscrupulous agencies.

The Act sets out the following new rules and standards:

Security deposits cannot be more than the cost of five weeks rent payment unless the rent exceeds £500,000. If the rent exceeds £500,000, it is capped at six weeks.
Holding deposits are to be no greater than one week’s rent and they are now refundable to the tenant.
If the landlord or letting agent breaches the requirements, a fine of £5,000 is payable in the first instance. Subsequent breaches could lead to criminal prosecution.

Under the new Act, letting agents will only be permitted to charge for the following:

Rent;
Deposits;
Early termination of the tenancy at the tenant’s request;
Council tax, utilities and communication services;
Payment of damages in the cases of breached agreements; and
Late rent payment penalties.

The probability is that agents will try to pass these fees on to the Landlord now they can no longer charge them to the tenant. Increased fees will reduce the landlord’s return on investment and possibly make investing in buy to let properties less attractive.

The Home (Fitness for Human Habitation) Act 2018

This Act came into force on the 20^th March 2019. The Act is applicable to all tenancies that provide accommodation unless they have a fixed term of 7 years or more.

Note that a Farm Business Tenancy will be exempt from the Act after a 7 year term has expired if it is continuing annually. However, new agreements for Farm Business Tenancies are not exempt from the Act.

The Act effectively amends the Landlord and Tenant Act 1985 in relation to rented residential accommodation. The consequence is that it provides tenants an alternative process to request repair and improvement works to be undertaken. This applies in the event that the landlord (or landlord’s managing agent) does not undertake the work and the accommodation remains unfit for human habitation.

The Act uses the Housing Health and Safety rating system (HHSR) to determine the accommodation’s fitness by using the 9 hazards identified by the HHSR which includes but are not limited to;

Condensation, damp and mould growth
Excess cold
Excess heat
Asbestos and manufacturing mineral fibres (AMMF)
Carbon monoxide and fuel combustion products
Domestic hygiene pest and refuge
Electrical hazards
Sanitation and drainage problems
Water supply
Structural collapse and failing elements
Crowding and space
Inadequate natural lighting

Furthermore, the accommodation only needs to be deemed unfit on one of the 9 hazards.

The Landlord will not be responsible for;

The repairs for which the tenant is liable under the tenancy
The duty of the tenant to use the premises in a tenant-like manner
An express covenant on the tenant which has substantially the same effect as the duty under the Act.
Rebuilding or reinstating the dwelling in the case of structural damage by fire, storm, flood or inevitable accident
Keeping in repair or maintaining anything which the tenant is entitled to remove from the dwelling
Repairing anything which if carried out would put the Landlord in breach of any obligation imposed by any enactment
Carrying out works or repairs in which consent by a superior landlord or other third party is required and has not been obtained following reasonable endeavours to obtain it

Butcher and Barlow have a specialist team who are able to assist with both of these matters. The Commercial Department deal with both the purchase and sale of buy to let properties. The Property Dispute Resolutions Team are able to assist in the event of any issues arising.

For further information and to find out how we can assist you, contact Mike Bracegirdle, Zoe Paton-Crockett, James Holton or Jonathan Aldersley at our Gadbrook Park office in Northwich on 01606 334 309.

Mike Bracegirdle