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June 29, 2022
December 21, 2021

What fees and deposits must a tenant pay?

Written by
Steve Sims

From tenant fee ban penalties to what landlords can charge, find out everything you need to know in our latest feature!

a female landlady reviews tenant fees and deposit paperwork

Table of contents

The tenant fees ban limits how much landlords can charge for setting up or renewing a tenancy. The ban - officially the Tenant Fees Act 2019 - applies to every tenant and landlord regardless of whether the rented property is a private home, student accommodation or shared house.Breaking the rules can trigger a hefty financial penalty, so landlords and tenants need to know what counts as a legal fee.

The rules differ a little between England, Scotland and Wales. This guide follows the English version of the Tenants Fees Act 2019.

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Fees landlords can charge

The Tenant Fees Act has introduced the concept of permitted fees.

Landlords can only charge tenants fees on this list:

Rent

Rent should cost the same every month, not loaded with extras for the first couple of instalments. Landlords can't increase what the renter pays unless the tenancy agreement includes a rent review clause.

Refundable holding deposit

Landlords can ask prospective tenants for a refundable holding deposit to reserve a home, capped at one week's rent. For example, if joint tenants pay an agreed rent of £275 a week, the holding deposit is £275 regardless of the number of tenants. Advertising the property must stop once a holding deposit is paid, and the prospective renter must be given the tenancy agreement. Both sides have 14 days to sign the contract.

Once the tenancy agreement is signed, the deposit must be returned within seven days.

Landlords can only keep the deposit when a tenant:

  • Gives false or misleading information
  • Fails the Right to Rent check
  • Withdraws from the deal
  • Unreasonably withdraws from the deal

Landlords can only take one deposit against a property at a time, while tenants can put deposits down on any number of homes at once.

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Security deposit

The security deposit is money a landlord holds while a tenant lives in a home to cover unpaid rent or damage. The maximum deposit is no more than five times the weekly rent for homes where the yearly rent is £50,000 or less. The deposit rises to six times the weekly rent if the annual rent is more than £50,000.T

o work out the weekly rent if the monthly rent is £850:

  • Multiply the monthly rent by 12 (£850 x 12 = £10,200)
  • Divide by 52 (£10,200/52 = ¬£196.15)
  • Multiply by five for rents under £50,000 for the maximum allowed deposit (£196 x 5 = £980)

Costs related to changing a tenancy

If a renter ends a tenancy early, a landlord can charge for advertising, referencing costs and the rent until a new tenant moves in. However, landlords must show the cost of any loss and keep any fees reasonable.

During a tenancy, charging some reasonable fees is OK, like adding or removing someone from the agreement, allowing a pet or permitting to run a business from the property.

Strictly, reasonable‚ is limited to £50 unless the landlord can show the cost was higher, but still reasonable.

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Utility bills and council tax

For some rentals, landlords bundle the rent with the cost of other services, like gas and electricity bills or broadband in a shared house. These fees are allowed under the Tenant Fees Act, providing the landlord passes on the cost without any extra charge.

Other fees

Landlords can write some specific fees into their tenancy agreements. They include:

  • Interest for late rent payments - Landlords can charge for rent in arrears, but only after the money is more than 14 days late and at an interest rate of three per cent above the Bank of England base rate.
  • Replacing locks, keys and security cards Reasonable claims should reflect the cost of replacing keys etc and be supported by evidence from the landlord, like invoices from tradespeople.

Tenant Fee Ban penalties

Local council trading standards officers enforce any alleged offences and can impose fines of up to £30,000 for each offence. Failing to repay a holding deposit is treated as a civil offence and carries a penalty of up to £5,000.

Landlords who have charged an unlawful fee cannot evict a tenant until the fee is repaid.

Woman holding keys to her new rented property in the palm of her hand

Tenant Fee Ban FAQ

Can I ask a tenant to pay a fee to view a property?

No. Viewing is considered with granting the tenancy, so the fee is banned.

Can I charge a tenant for setting up a new tenancy?

No. Landlords are responsible for paying for any services they contract, including any costs associated with setting up a tenancy, like references, credit checks and administration.

Can I charge a tenant for an inventory?

No. A landlord can choose to carry out an inventory but cannot charge a tenant for the service.

Can I charge a tenant for a professional clean at the end of a tenancy?

No, but you can ask them to clean the property to a professional standard when they leave. If the property is in a poor state, you can recover the cost from any security deposit.

Where can I find out more about the tenant fee ban?

Several tenant fee ban guides are published for landlords, letting agents and tenants by the housing ministry. Keeping up-to-date with changes in legislation and property can be tasking as a property owner or tenant!

At Oasis Living, we use tech and automation to make the letting process more efficient and less hassle for all involved. We offer premium property management, FAST tenant-find service and even free maintenance call out as a standard.

Contact one of our property letting experts today to find out more. Alternatively, you can read more about our mission to improve the property letting experience, on our about page.

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