Can my landlord charge me fees to rent a property?

From 1 June 2019, the Tenant Fees Act came into force. This prohibited landlords and agents from charging any fees to tenants, other than those ‘permitted’ by the Act. Any tenancy that is signed on or after 1 June must adhere to the new regulations.

What fees are prohibited under the act?

Any fees not listed on the government’s ‘permitted’ fees list are prohibited. Landlords and agents are NOT able to charge fees for:

• Property viewing

• Referencing

• Administration charges

• Guarantors

• Inventory checks (both check in and check out)

• Right to Rent checks

• Pet fees/deposits

• Renewal/exit fees

• Interest on permitted payments

• Professional end of tenancy cleaning – as a special clause (breach of contract ONLY)

• Third party fees (unless the tenant chooses to undertake the services themselves)

• Gardening services (unless included within the rent)

However, Letting agencies are earning thousands of pounds in commission by attempting to get around the ban on tenant fees by forcing renters to sign up to controversial “zero deposit” schemes.

Zero deposits

Zero deposit schemes involve payment of a fee equivalent to about a week’s rent instead of a standard security deposit, (which is normally five weeks’ rent). It is offered up as a low-cost option to renters. Unlike a traditional deposit, the fee is non-refundable, and tenants remain liable for damages at the end of their tenancy. There are also extra hidden costs, for example membership renewals and fees for adjudication in the event of a dispute.

It has been reported that renters are routinely being advised to signed up for these schemes by Lettings Agents – who stand to earn commission for each person they refer. There have been many allegations of pressure selling and many tenants being advised that they were required to sign up as a condition of their tenancy.

With rental properties in high demand at the moment, tenants feel like they have no other option than to sign up to these schemes or fear missing out on a property.

The scheme itself is a valid option that can be offered by Lettings agents, however, by requiring tenants to sign up in order to rent a property, it is likely to be a breach of the Tenant Fees act. Such breaches carry fines up to £5,000.

Agents introducing the schemes should give tenants a true choice about signing up, give them all of their options, provide accurate information about how they work and declare any commission. But while “good agents” abide by those standards, others do not.

More and more people are tempted to enrol into these schemes due to the current cost of living pressures, but they could end up paying hundreds in fees with no option to get their money back at the end of their tenancy. It is vital that renters know what they are getting themselves into.

For some, these schemes allow people to get a property that they couldn’t afford otherwise. But the schemes ought to be open and transparent, and people shouldn’t be pressurised into adopting them.

National Trading Standards are now examining concerns about the sale of zero deposit schemes, with a view to taking action as a result of multiple mis-selling allegations.

There is a concern that we could end up in another PPI moment and that there will be a number of law suits off the back of this. Tenants could allege that they were not provided with sufficient data to make an informed decision, and that the product was enforced upon them to allow agents to earn commission.