UK Tenant Fees Act / Tenant Fee Ban - background & how Reapit can help
This guide has been reviewed against our global client base and classed as relevant to the UK only
The Tenant Fees Act 2019 came 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 legislation, followed by how the system can help you carry out the key processes required by the legislation - processes include how to work with and report on holding deposits
New features have been added to the system to ensure that deposits being held don’t exceed the amount specified in the legislation
BackgroundFrom 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: - Rent - 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 - A refundable holding deposit capped at no more than one week’s rent (see next section) - Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher - Payments associated with early termination of the tenancy, when requested by the tenant - Payments in respect of utilities, TV licence and council tax - A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement 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: - the landlord decides not to enter into an agreement within that 15 day period - the landlord and tenant fail to enter into an agreement within that 15 day period - 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: - the tenant makes false or misleading statements - the tenant fails Right to rent checks - the landlord and tenant can agree to extend the 15 day period – but this must be agreed in writing. 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. 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
You You are encouraged to update compliance text on templates using the Letter Template Editor Reapit If you require Reapit to make template changes on your behalf, we offer a Template Service Change Request, which incurs a charge | |
Daily Processes1. 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. 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 | |
3. Other holding deposit processes | |
4. Enhancements available from version 12.94.8+ |
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