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This guide has been reviewed against our global client base and classed as relevant to the following regions: UK

The Tenant Fees Act 2019 comes into effect from 1st June 2019 in England and 1st September 2019 in Wales. The ban applies to all Assured Shorthold Tenancies (AST), student accommodation tenancies and licences to occupy housing in the private rented sector.

This page provides some background on this new legislation followed by how Reapit Agency Cloud can help you carry out the key processes when the new tenant fee ban legislation takes effect. Processes in include how to work with and report on holding deposits; new features have been added to Reapit software to ensure that deposits being held don’t exceed the amount specified in the legislation. Please take some time to familiarise yourself with the contents of each section.


Background


 What fees can I ask a tenant to pay?

From the above dates onward, you can no longer request that a tenant, or anyone acting on their behalf (e.g. a guarantor), makes payments in connection with a tenancy.

The following list outlines payments which are permitted:

  1. Rent
  2. A refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above
  3. A refundable holding deposit capped at no more than one week’s rent (see next section)
  4. Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
  5. Payments associated with early termination of the tenancy, when requested by the tenant
  6. Payments in respect of utilities, TV licence and council tax
  7. A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement


 The holding deposit

A maximum of 1 week's rent can be taken as a holding deposit for a maximum of 15 days, beginning on the day that the holding deposit was received by the agent or landlord. Not all agents may take a holding deposit, however this is the maximum permitted, regardless of the annual rent amount.

The holding deposit must be repaid to the tenant within 7 days if:

  1. the landlord decides not to enter into an agreement within that 15 day period
  2. the landlord and tenant fail to enter into an agreement within that 15 day period
  3. a tenancy agreement is entered into by the landlord and tenant.
    In this scenario, it is unlikely that the holding deposit will be repaid, as this amount can be used to put towards the first rent payment or security deposit.

There are a number of scenarios whereby the holding deposit can be forfeited such as:

  1. the tenant makes false or misleading statements
  2. the tenant fails Right to rent checks
  3. the landlord and tenant can agree to extend the 15 day period – but this must be agreed in writing.


 Existing security deposits

Where a tenancy renews after 1st June 2019, the agent or landlord will need to return any excess deposit beyond the 5 or 6 week entitlement. This deposit amount retained will be based on the agreed renewal rent, not the original rent.

If the tenancy is continuing or is a statutory periodic agreement, then the tenant will be bound by the terms of that contract until it is either renewed or terminated. In this scenario, the agent is not obliged to immediately refund part of the tenancy deposit.


 Portal feed & template considerations

The new legislation requires that the following information should be displayed for every property:

  • Permitted payments
  • Details of your membership and name of the redress scheme
  • Details of your membership and name of any client money protection (CMP) scheme

To be compliant, there are actions and steps you can take:

  • Portal Feeds
    • You
      • Consider what you wish to present on the Portal, minimum is the above but please take this opportunity to consider holistically other compliant requirements
      • Create and provide Reapit with clear text that meets compliance requirements
    • Reapit
      • Will add or where required replace compliance text with your revised text and apply to all portals consistently


  • Templates
    • You
      • You are encouraged to update compliance text on templates using the Letter Template Editor
        This will save you time, no additional fees will be incurred and ensures you meet the 1st June 2019 deadline - follow the Letter Template Editor guide to make your changes
    • Reapit
      • If you require Reapit to make template changes on your behalf, we offer a Template Service Change Request, which incurs a charge
        Once we’ve received your revised text, we will schedule in the work and advise you on a completion date - please be aware that we will endeavour to schedule work to be completed by 1st June 2019 - however, this is not guaranteed and therefore we strongly advise you to use the Letter Template Editor to make required changes


Daily Processes


1. Registering a holding deposit

This process does not require an invoice to be raised, as this limits the movement of monies from the various ledgers. A prospective tenant will need to make a holding deposit payment.


 Step-by-step process
  • From Import Receipts from Bank Statement, click Select tenancy
  • Ensure Status is set to Any
    This also displays tenancies which are currently Pending Offer

  • Once the payment has been allocated, in the Tenancy Transactions screen:

  • Right-click over the payment and select Change transaction narrative
    This option may require accounts access permissions to be changed

  • In the Edit Narrative box, enter holding fee

  • Click Yes to confirm

  • The amount will now be available as an Unallocated payment and held as a holding deposit

  • If a receipt is requested by the tenant, right-click over the payment again and choose Print invoice
2. Reporting on unallocated holding deposits

This section outlines how to report on holding deposits which are still being held as unallocated.


 Step-by-step process
  • From Lettings, Reporting and Analysis menu, click Query Transactions

  • Dates: set to the last 15 days

  • Unallocated: set to £0.01

    This will then report on every holding deposit which remains unallocated, setting this as 1p will take into account those which have been moved to a deposit or a rent during that period

  • Click Report

  • The report results need to be filtered to show only the holding deposit:
    click to the right of the Description grid heading, type holding and press enter


  • Just the holding fee transactions will be displayed
    The Date shown is the Bank statement date (Tenant Payment Received Date)

3. Other holding deposit processes


 Returning the holding deposit

• From the Tenancy record, right-click Record Receipt and select Tenant Repayments

  • The Tenant Refunds screen is displayed, select and click Post


 Allocating the holding deposit
  • From the Tenancy screen, click Raise Initial Invoice (bottom right)


  • Select and click Create Postings
  • Once both charges (deposit & first month rent) have been created, the holding fee will be seen as a credit
  • Allocate the holding deposit (payment) as normal
    The tenant can request this to be allocated to the rent or deposit, or they can request it back, Reapit does not auto allocate the holding fee


 Refunding deposit on renewal
  • Refer to the section titled: Returning the holding deposit


 Moving the holding deposit to another tenancy
  • From Tenancy Transactions, right-click the holding fee and select Assign receipt to other party 
    This option may require accounts access permissions to be changed


4. Enhancements available from Reapit Agency Cloud version 12.94.8+


 Setting a deposit amount

On creation of a new tenancy, if the deposit exceeds the amount permitted for an Assured Shorthold tenancy, a message will be displayed.

This message will be prompted based on either scenario below:

  • 5 weeks rent where annual rent amount is below £50,000 a year
  • 6 weeks rent where annual rent amount is above £50,000 a year


 Tenancy renewal

On completion of a tenancy renewal, if the current deposit held exceeds the permitted amount, a message will be displayed to advise on this.


 Unallocated tenant receipts screen

In the Unallocated Tenant Receipts screen, a new column has been added (Earliest) that displays the bank statement date. This field can be used to filter between a date range.



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