The Tenant Fees Act – transition period ending
The Tenant Fees Act came into effect in England on 1st June 2019. The law bans letting agents and landlords from charging tenants any letting fees other than rent, tenancy deposits, holding deposits and explicitly stated default charges.
At the same time, a deposit cap was introduced meaning that tenancy deposits are restricted to five weeks’ rent (or six weeks if the annual rent is £50,000 or more). Since last year, any existing deposit over this new 5-week cap had to be refunded on any new or renewed fixed-term tenancy agreements created on or after the 1st June 2019.
Between 1st June 2019 and 1st June 2020 there was a ‘transitional period’ where this only applied to new or renewed tenancies. At the end of this period the Act will apply for all private tenancies, regardless of when they were signed.
Do I have to refund the deposit excess now?
Landlords and letting agents are not required to automatically reduce all tenancy deposits to the five (or six) week cap by 1st June 2020. The refund is only required when a new or renewed fixed-term agreement is entered into.
The impact of coronavirus
It is worth stating that the deposit cap is based on the rent at the time the tenancy was entered into (or renewed). So if a landlord has offered a temporary rent reduction mid-tenancy for their tenant during the pandemic, they are not obliged to adjust the tenancy deposit. However, if a new or renewed tenancy is agreed at this new lower amount then you would have to adjust the deposit accordingly.
If you have other queries about renting property throughout the coronavirus pandemic please head to our dedicated page: www.finders.co.uk/coronavirus
Posted 14th May 2020