The Tenant Fees Act 2019 – how does it impact tenancy deposits?

The Tenant Fees Act sets out the Government’s approach to banning letting fees paid by tenants in the private rented sector. It came into force in England on 1 June 2019, prohibiting landlords and agents from charging most letting fees to tenants, other than those ‘permitted’ by the Act. It also caps tenancy deposits paid by tenants in the private rented sector in England. 

The aim of the Act was to reduce the costs that tenants can face at the outset, and throughout, a tenancy. Since it came into force, tenants can see what a given property will cost them in the advertised rent with no hidden costs. 

Who does the act apply to?

The Tenant Fees Act applies to assured shorthold tenancies, student accommodation tenancies and licences to occupy housing in the private rented sector. The Act only applies to landlords, agents and tenants in England. The Government’s Tenant Fees Act 2019: guidance helps explain how this legislation affects tenants, landlords and letting agents.  

Letting fees are already banned in Scotland and Northern Ireland.  

Renting Homes (Fees etc.) (Wales) Act 2019 

In Wales, landlords and agents were banned from charging extra fees from September 2019 following the Renting Homes (Fees etc.) (Wales) Act 2019. It applies to any standard occupation contracts and means that private landlords and letting agents are not allowed to charge fees for most things. The Welsh Government provides more information for tenants on its website, Letting fees: guidance for tenants and for landlords and agents Letting fees: guidance for landlords and agents.  

What fees can be charged?

From 1 June 2019 when the Tenant Fees Act came into force, the only payments that landlords or letting agents have been able to charge to tenants in relation to new contracts in England are ‘permitted fees’. These include the following: 

  • Rent 
  • A refundable holding deposit (up to one week’s rent per property) 
  • Tenancy deposit (exclusions apply, see below, ‘Changes to tenancy deposits’ for more information) 
  • Changes to the tenancy (for example, introduction of a pet, permission to run a business from the property or other amends that change the contractual responsibilities. This is capped at £50 per change unless the landlord can prove that the resulting cost was higher AND is reasonable) 
  • Utilities (electric, gas, water) 
  • Council tax, TV licence fees, communication fees (e.g. telephone, broadband etc.) 
  • Fee for early termination of tenancy/surrender fee – the landlord must be able to show reasonable loss has been suffered, for example as a result of referencing or re-advertising, and can charge rent until the next tenant moves in 
  • Default fees which should be written into the tenancy agreement for: 
      • late payment of rent – this can only be after 14 days have passed and interest at a maximum of three per cent above the base rate 
      • replacing locks/security fobs. The guidance states, for example, that a new standard door key could be valued between £3-£10, a specialist door key between £5-£20 or a replacement key fob up to £50; there may be circumstances where it is necessary to pay more and ALL claims must be supported by evidence from the landlord of costs and be reasonable 

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 the following: 

  • Gardening services (unless included within the rent) 

For a full list of permitted and prohibited fees visit the GOV.UK website for guidance. 

Changes to tenancy deposits:

As part of the Tenant Fees Act 2019, the amount of tenancy deposit that a landlord or agent can request was capped, with the amount that can be taken as a deposit depending on the total annual rent for the property. The following only relates to England.  

If the total annual rent is less than £50,000, landlords and agents are only permitted to ask tenants to pay up to five weeks’ rent. 

If the total annual rent exceeds £50,000 and is below £100,000 then landlords and agents can request up to six weeks’ rent from tenants as a tenancy deposit. 

Any deposit taken from a tenant must be protected in one of the three government backed tenancy deposit protection schemes, such as mydeposits, within 30 days of the payment being taken. 

Calculating tenancy deposits following the tenancy deposit cap 

  • You can calculate the total weekly rent using the following steps: 
  • Step 1 – Monthly rent x 12 = annual rent  
  • Step 2 – Annual rent ÷ 52 = weekly rent  
  • Step 3 – Weekly rent x 5 or 6 = maximum deposit  

Our deposit calculator is free to use and will help you work out the maximum deposit amount you can take. We recommend all our members use this tool to help with the calculations and to make sure you protect the right amount.  

For more information read Tenancy deposit cap rules: England. 

There is no formal cap on deposits in Wales. In Scotland, the amount that can be charged as a deposit cannot be more than two months’ rent. 

In Northern Ireland the Private Tenancies Act (Northern Ireland) 2022 came into force in April 2023. This means that tenants can no longer be asked to pay a tenancy deposit of more than one month’s rent and the time a landlord has to protect a tenancy deposit and provide the required information to a tenant has increased. More information is available here.   

What are the penalties for non-compliance with the Tenant Fees Act? 

Penalties for non-compliance with the Tenant Fees Act are clear and severe. It is important to understand what fees are permitted and remind yourself that if a fee is not on the above list, it is prohibited.   

Breach of legislation will usually be a civil offence carrying a financial penalty of up to £5,000 per fee. Despite this, if a further breach is committed within five years of a financial penalty or if there is a conviction for another breach, this becomes a criminal offence. 

The penalty imposed for a criminal offence – a banning order offence under the Housing and Planning Act 2016 – is an unlimited fine. 

According to GOV.UK “Where an offence is committed, local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution.” It is down to the local authority’s discretion as to whether they wish to prosecute or impose a financial penalty. 

Failure to repay a tenant’s holding deposit will be treated as a civil offence and carries a penalty of up to £5,000. 

In addition, landlords and agents who have charged an unlawful fee will not be able to evict a tenant until they have repaid these fees. Failure to comply with the legislation can therefore have serious ramifications. Penalties will be enforced by trading standards and tenants can apply to the First Tier Tribunal for a refund of a prohibited fee. 

If in doubt it is advisable to seek clarification from GOV.UK. In addition, landlords, letting agents and tenants can read the government’s comprehensive ‘Tenant Fees Act 2019: guidance’ here. For more information on landlord fines, Total Landlord, also powered by Total Property, has a comprehensive guide, Landlord fines: How much are the charges and how do you avoid them? 

Penalties for failure to comply with the Renting Homes (Fees etc.) (Wales) Act 2019   

Landlords should be aware that the penalties for failing to comply with the Renting Homes (Fees etc.) (Wales) Act 2019 are distinct from their equivalent in England.  

An enforcement authority can issue landlords or letting agents a fixed penalty notice of £1,000 for the offences of: 

  • requiring a tenant to make a prohibited payment 
  • requiring a tenant to enter into a contract for services in relation to a tenancy 
  • requiring a tenant to make a loan in relation to a tenancy.  

An enforcement authority may choose to prosecute which, if convicted, may result in a fine (not subject to any statutory limit) for: 

  • requiring a tenant to make a prohibited payment 
  • requiring a tenant to enter into a contract for services in relation to a tenancy 
  • requiring a tenant to make a loan in relation to a tenancy 
  • providing false or misleading information in relation to a notice issued seeking information.  

An enforcement authority may choose to prosecute an offence if there is a failure to comply with a notice issued under section 10 of the Act. A person who commits an offence under section 11(1) is liable on conviction to a fine not exceeding level 4 on the standard scale (at the time the guidance is issued, the current maximum is £2,500). 

The Welsh Government’s Letting fees guidance for landlords and letting agents provides full details. 

Need more guidance on private rented sector legislation and the Renters (Reform) Bill? 

Since it came into force on 1 June 2019, all landlords and agents have been expected to comply with government guidelines relating to the Tenant Fees Act. Changing regulation and the introduction of new legislation can be confusing, but it is imperative to get it right from the start. We recommend subscribing to LandlordZONE, also powered by Total Property, to keep up to date with private rented sector news. And for more information on the latest developments relating to the Renters (Reform) Bill, visit Total Landlord’s Renters (Reform) Bill Hub

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