Tenants Can Reclaim Excess on Their Deposits
Tenant Fees Act
Tenants Can Reclaim Excess on Their Deposits:
About two weeks ago, there were certain changes in England.
These changes led to a ban on excess tenancy charges and letting fees.
Resultantly, the government established a new set of rules.
It will affect both the letting agents and landlords.
According to the Government, the rules will cost the landlords as much as £83m.
Similarly, they will cost the letting agents as much as £157m.
Notably, the new regulations are only applicable to new or renewed tenancy agreements.
To be specific, they are for agreements signed on or after June 1, 2019.
Also, a similar regulation was established in Scotland some years ago.
By this September, a similar rule will come into effect in Wales.
Currently, there is no ban concerning this in Northern Ireland.
However, it may come into effect later.
This depends on if a sitting assembly passed the vital legislation.
Therefore, some renters will get a partial deposit refund.
This is specifically for an agreement signed before June 1, 2019.
Nevertheless, this partial deposit refund is for cases where a deposit was collected which exceeded the 5-week regulation.
Basically, many tenants may be able to get refunds when renewing their tenancy later.
This is because many agents and homeowners require deposits of 6 weeks or more.
Hence, the deposit will exceed the 5-week rule and, as such, the tenants get partial refunds.
Generally, in England, private landlords and agents used to charge different types of fees.
Nonetheless, the new rule prevents them from doing so now.
This change will have more effect on letting agents than the private landlords.
This is because letting agents are the major culprits when it comes to charging these fees.
Penalties for breach of agreements
Certainly, there are payments in a statutory list (Schedule 1 of the Act) of permitted payments.
With this new rule, landlords must not collect any fees that do not appear in the list.
Any violation of this new rule attracts severe punishments.
The violation will be often considered as a civil breach.
It attracts a financial penalty of as much as £5,000.
Consequently, letting agents and homeowners must know the regulations concerning this.
Failure to do so may lead to a breach of laws.
Furthermore, violation of this rule can sometimes be a criminal offence.
This is possible if there is a further violation of the rule within five years of financial punishment.
Or if the previous breach led to a conviction.
After a conviction, there may be serious penalties.
These include an unlimited fine and banning order offence according to the Housing and Planning Act 2016.
Just as in the cases of other offences, a financial penalty may replace the prosecution.
Simply put, the enforcement authorities may charge the offender as much as £30,000.
In such a situation, the local authority has the right to decide what to do.
In other words, the authority decides whether to fine the offenders or prosecute them.
If there is an imposition of financial penalty, the case will not be a criminal conviction.
The fees that the new rules banned
This new rules banned lots of fees. These fees include charges for credit checks, references, and viewings.
Others banned are fees for inventories and creating a tenancy agreement.
Previously, letting agents and landlords used to collect these fees.
In a few extreme situations, these fees may be as much as £800.
In practice, it is only required for homeowners and letting agents collect rent and security deposits.
The deposits are refundable charges.
The maximum deposit that any agents or landlords can charge is one week’s rent if the total annual rent is below £50,000.
However, if the rent is over £50,000, the deposit can be up to six weeks’ rent.
Nevertheless, agents and landlords can collect some additional fees.
These fees are in the statutory list of permitted payments.
Details of deposit scheme
As regards security, you need to understand a few things.
Foremost, the agents or landlords must store the deposit in a scheme.
This scheme must be government-approved.
In Wales and England, we have three major deposit schemes. These schemes are:
- Deposit Protection Service
- Tenancy Deposit Scheme
In Ireland and Scotland, there are other types of deposit schemes.
Generally, there are two forms of tenancy deposit schemes:
- The scheme stores the deposit for free
It is called a custodial scheme. Basically, the scheme does not charge for keeping the deposit.
- The renter or agency pays the scheme to ensure the deposit
This is a type of an insured scheme.
Here, the agency or tenant pays a certain amount to ensure the deposit.
After paying the deposit, the homeowner or agent keeps it in the scheme.
They must do this within 30 days of signing the tenancy agreement.
Also, the depositor must give the tenant information about the scheme used.
When moving out, renters should ask the homeowner or agent about their deposit.
In general, the tenant will get the deposit back.
Sometimes, the agency or landlord may not respond within 10 days.
So, you can also get in touch with the scheme directly.
Normally, the scheme can release the deposit directly to the tenant.
However, there may be an ongoing dispute on the final deposit.
Usually, this is because of owed rent or property damages.
In such a case, the scheme will hold the deposit until the parties resolve the issues.
Would you like to know more about the new rules?
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