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Fair (or)Deal for Tenants?

You may have heard of the Tenant Fees Act 2019, in force since June of this year. Known by some as a ‘tenant fees ban’, the Act, whilst prohibiting landlords from charging upfront fees, still allows them to charge for rent, and refundable holding and security deposits for tenancies entered into from 1 June 2019.

Holding deposits, used to secure a property and remove it from the market, cannot exceed the value of a week’s rent. Security deposits must be capped at no more than five weeks rent (where the annual rent is less than £50,000, or six weeks’ rent if over this). Landlords can also levy fees for key loss, late rent payment and changes to tenancy agreements.

The rationale behind the Act was to shift the imbalance between landlords and tenants, namely, “to deliver a fairer, good quality and more affordable private rented sector”.  Indeed, the government estimates that in its first year, the change could cost landlords up to £83m and letting agents £157m.

A basic interpretation is that landlords will/have simply increased rents, so, on the ground, and in a market where some say tenants may outnumber homeowners by 2023, has fairness been achieved for tenants?

Tenant Fees and Deposit Passports

Deposits may have been capped but the government consider further reform here. Deposit passports, first proposed in 2017, would assist tenants financially, who await return of one deposit, whilst struggling to fund another to secure a new home. The idea being that a tenant would provide a new landlord with a certificate at the end of each tenancy. Tenants rights group Generation Rent say such a scheme allowing tenants to ‘passport’ funds would save them approximately £800 with each move. Currently, there is an estimated loss of £80 million a year in interest for tenants.

But fees and funding a tenancy are not the end of it. What of unlawful or other prejudice against prospective tenants? A tenant must be legally entitled to rent a property and landlords must conduct right to rent checks to avoid civil penalties. Recipients of housing benefit have historically been discriminated against, although the Keogh v. Nicholas George Limited case set a precedent in February 2018, with appropriate compensation awarded to a mother for sex discrimination by a lettings agency. But discrimination can also arise with private tenants, where, following payment of a holding deposit, and with referencing having been satisfactorily passed, a landlord chooses to unreasonably back out of a tenancy, specifying term or marital status as a ground to refuse (it often works the other way, with a tenant deciding not to proceed).

Further Questions

Was it the intention of parliament that there be such difficulties in creating tenancies? Does the payment of a holding deposit, as a fundamental, precursory step before the signing of a tenancy agreement, and which creates a binding conditional contract, entitle a tenant in law to be let a property if satisfactory references have been obtained? There are some interesting legal questions which cannot be properly addressed here, although such ill conduct may give rise to further claims by tenants against landlords.

For further information on landlord and tenancy disputes, please contact a member of the litigation team.

Asaph Glass

Asaph Glass

Solicitor - Dispute Resolution