A benign Tenant Fees Act development for tenants?

Tenant Fees Act

As you (should) all know, the 1st June 2019 saw the introduction of the Tenant Fees Act 2019, which outlaws a range of fees being charged to tenants.

Not all, some fees are still allowed.

If you want guidance on which ones, the government have produced a set of useful separate factsheets for landlords, tenants and local authorities

Press reports

The rental press has been awash with numerous reports and stories of the effects of it. Some claiming it has seen rent levels rise whilst others just put rises down to normal market forces, decrying any notion of negative impact.

Prior to the commencement of the Act, there were also wide predictions of letting agents being driven out of business but so far there doesn’t seem to be much evidence of that.

The fact is that it is kind of too early to tell what impact it is having. I certainly haven’t had to advise cases or defend any possession proceedings based on the new law.

However, whilst the Act outlaws certain fees for all lettings created after the 1st June, one missed trick is that the new legislation also applies to lapsed ASTs that are renewed after that date.

Lesser known fact

One perhaps surprising development (well it surprised me, as in the absence of any cases I haven’t had the need to fully factor it into my little box of tricks yet), is the news this week of the effect of the TFA on deposits paid before the Act came into force.

As well as, prohibiting fees the TFA also limited the charging of deposits from a previously normal 6 weeks worth of rent to only 5 weeks. The new development, that I picked up curiously via the Manchester Evening News reports that where a pre-TFA tenancy expires and is renewed after the 1st June 2019, a payment from any deposit taken at the commencement of the tenancy that was equivalent to 6 weeks rent requires the person holding the deposit to return a week’s worth to the tenant, as it is classified as an unauthorised amount.

Quoted in the article is Debbie Davis of the Tenancy Deposit Scheme who informs us that since the 1st June 2019 the TDS has returned a weeks worth of deposit to 2,550 tenants at an average of £320.27, totalling a whopping £817,033.31………in just 5 months and that doesn’t take into account My Deposits or the DPS nor any sums paid back by tenants irrespective of the schemes.

Are any readers here in breach of this provision?

Quite apart from the problem with unauthorised fees is a further side effect that is set out on page 4 of the government’s factsheet for landlords that I mention above. I quote:-

“You cannot evict a tenant using the section 21 eviction procedure until you have repaid any unlawfully charged fees or returned an unlawfully retained holding deposit.”

So its all crucial stuff, this last proviso allowing me to add a new number 19 in my list of factors that can invalidate a s21 notice.

Are dodgy letting agents going to comply with the TFA?

Don’t be daft. Back in September, London Trading Standards published new figures revealing that:-

“More than 46% of 1,922 agents inspected in the 15 months up to June 2019 by local council trading standards officers were non-compliant with either the Consumer Rights Act and/or the legislation on redress scheme membership.”

If they’re cocky enough not to sign up to a redress scheme do you think they are going to bother with the TFA?

LTS also report that they estimate that London hosts around 6,000 letting agents and you can bet your life this figure doesn’t take into account the dodgy shysters operating through online portals based in Romania, Spain or Georgia, nor the gangsters pretending they are not letting agents but insisting that their business is something else.

Nor will that 6,000 include the numerous companies that don’t actually exist, the untraceable websites that look like they manage prime London locations that are in reality, two blokes working out of a flat above a newsagents in the Edgeware Rd.

Nor will those figures take into account the alias’s and shell companies operating agencies far and wide, or the individuals using Gumtree, facebook and Spareroom, meeting new tenants outside of a pub with a flash car wearing a too-tight suit and handing over keys to a property they have no instructions to let before disappearing off to dupe some other poor sod.

Safer Renting’s bread and butter

Such outfits making up 90% of my crew, Safer Renting’s daily grind and whose ranks look set to swell if this article in the Telegraph is any indicator that foreign-based landlords have grown from 7% to 11% in just the first quarter of 2019.

Who is going to manage their property while they live elsewhere? That’s right, the dodgy entrepreneurs who can cram 15 people into a three-bed house with the judicious pacing of stud walling that the landlord will rarely if ever see.

The same dodgy entrepreneurs that will be ignoring the TFA and dropping the landlord in the clarts.

Proceed with caution

Choose wisely dear reader and bear in mind

“Cheap is rarely cheerful”.

Don’t be fooled by a smart car and a suit bought from Norman Wisdom. If you use an agent, give them a call and find out if the deposit they hold for your tenant has been adjusted.

Remember, they work for you, not tenants. That’s why the Tenant Fees Act was brought in.