Fines For Expat Landlords Ignoring Tenant Fee Ban

Lisa Smith, BA (Hons), CeFA

Expat landlords could face fines of up to £5,000 if they breach the new tenants fee ban in England that starts from June 1.

The law moves the responsibility for the costs of setting up renewing and ending tenancies from private renters to landlords.

The measure is property-based, so landlords living overseas must comply if they rent out a home in England.

The main charges that are scrapped are:

  • The cost of including a guarantor on a tenancy agreement
  • Fees for checking references and credit profiles
  • Paying for inventories at the start and end of tenancies
  • Service charges, such as gardening or cleaning
  • Administration charges, like the cost of drafting a tenancy agreement

Dilemma for landlord

The only fees that are allowed under the rules are:

  • Holding deposits – which are refundable within deadlines and limited to no more than a week’s rent
  • Security deposits – Capped at no more than five week’s rent
  • Default charges for breaching the tenancy agreement, such as paying rent late

The ban also introduces a dilemma for landlords that have already collected fees from tenants.

If a tenancy is renewed on or after June 1 and the security deposit is more than five week’s rent, the excess must be refunded.

However, if a fixed tenancy rolls over into a periodic one, no refund is due if the deposit exceeds five week’s rent.

Rents cannot be set higher for the first few months to recoup the extra charges landlords may have to pay to let a home.

Buy to let rents rising

The rules apply to shared houses in multiple occupation as well as single letting properties.

The penalty for mischarging fees if a fine of up to £5,000 for the first offence, rising to unlimited fines and a jail sentence for a second offence.

Scotland has had a tenant fee ban in place since December 1, 2017, while a similar ban starts in Wales from September 1.

Northern Ireland has no tenant fee ban.

Meanwhile, the latest data from the Office of National Statistics sets rent increases at 1.2% across the UK for the year to April 2019. The figure dropped to 0.5% for London.

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