The Tenant Fees Act 2019

Monday 16 September 2019

In June 2019 the Tenant Fees Act (“the Act”) came into force, regulating the charges a park owner can ask a tenant of a park home to pay.

Will the Act apply to my park?

If you rent out mobile homes on your residential park under an Assured Shorthold Tenancy (otherwise known as an AST), or under a Licence to Occupy the mobile home, the Act will apply to you.

What does the Act say?

The Act says that a landlord must not require a tenant, or guarantor, to make what is referred to as a prohibited payment.

The Act doesn’t explicitly state what a prohibited payment is, but it outlines what a permitted payment is.

A permitted payment in connection with a tenancy is:

1. Rent
2. A refundable tenancy deposit

If the annual rent is less than £50,000 the tenancy deposit can be no more than a sum equivalent to five weeks rent.

If the annual rent is more than £50,000 the tenancy deposit can be no more than a sum equivalent to six weeks rent.

Remember that any deposit taken must be protected in one of the Government’s Tenancy Deposit Schemes.

3. A refundable holding deposit (in order to reserve a park home) subject to it being a sum that’s no more than one weeks rent
4. A payment to change the tenancy (only if the tenant requests it) subject to a cap of £50, or reasonable costs incurred if higher than £50

With the exception of a tenancy entered into before 1 June 2019 (if the Tenancy Agreement provides for it) it’s not permitted to charge £50 for a renewal of the tenancy or an extension to the term of the tenancy.

5. A payment required to be made for the early termination of the tenancy (if the tenant requests an early termination)
6. Payments in relation to utility charges, TV licences, communication services (such as the internet) and Council Tax

The provisions regarding the maximum resale prices for utilities apply to Tenancy Agreements too.

7. A default fee for late payment of rent (where it’s more than 14 days overdue) or replacement of a key/fob (if the Tenancy Agreement provides for a charge to be rendered)

Any payment charged to a tenant that isn’t a permitted payment is a prohibited payment.

For example a charge for setting up a Tenancy Agreement, or creating an inventory, is a prohibited payment.

If you render a charge to your tenant that is prohibited under the Act you won’t be able to use what is known as the Section 21 Eviction Procedure until you have repaid the entirety of the prohibited payment.

When did the Act come into force?    

The Act is introducing the ban on prohibited payments in two phases:

1. If a Tenancy Agreement or Licence to Occupy a park home on your park was issued before 1 June 2019 you will be able to require the Tenant to make payment of any fees included in the Tenancy Agreement until 31 May 2020 (irrespective of whether or not the payments are prohibited payments under the Act).
2. If a Tenancy Agreement or Licence to Occupy a park home on your park was entered into after 1 June 2019 you will be prohibited from charging anything other than a permitted payment (as listed above).

How will the Act be enforced?

Trading Standards have the power to enforce the provisions of the Act and tenants can apply to The First Tier Tribunal to seek to recover any charges unlawfully rendered by a landlord.

What is the consequence of a breach of the Act?

If you breach the provisions of the Tenant Fees Act it will, in the first instance, be a civil matter and subject to a fine of up to £5,000.

If you breach the provisions of the Act again within five years it will be a criminal offence and you could be the subject of an unlimited fine.

However, a Local Authority will have discretion as to whether to impose a fine instead of pursuing a prosecution. If you’re a serious offender, the Local Authority can apply to The First Tier Tribunal for a Banning Order.