Maximum Deposit Possible at Law
Ian Macfarlane writes:
Assured Shorthold Tenancies - On 1 June 2019, The Tenant Fees Act 2019 comes into force. A key part of this new legislation is that tenancy security deposits will be capped at the equivalent of 5-weeks' rent for assured-shorthold tenancies with an annual rent of up to £50,000, or 6-weeks' rent for tenancies with an annual rent of £50,000 or more.
These changes will apply to ALL new tenancies entered into from 1 June 2019, and any existing tenancies that are renewed on a fixed-term basis. It doesn't affect any tenancies signed before 1 June 2019 (irrespective of when the tenant actually moves into the property), although the change will apply to any future fixed-term renewals.
http://www.legislation.gov.uk/ukpga/2019/4/contents/enacted
Summary of Tenant Fee Ban
- Limit tenancy deposits to five weeks’ rent
- Limit holding deposits to one week’s rent
- Ban any other payments (except contractual default penalties)
- Fines of £5,000 for first offence (civil)
- Fines of £30,000 for second offence (criminal)
Whilst the Act is to be welcomed against the backdrop of the current housing shortage and the need for tenants to be treated fairly, it will be interesting to see to what level the Act is enforced and whether this differs regionally depending on the resources of local authorities.
A number of tenancy deposit replacement insurance schemes have been launched as alternatives to the traditionally held deposit, which policies generate an income by way of commission for the Estate Agents or Landlord. I therefore wonder whether, in due course, this Act will be indirectly responsible for tenant paying higher rents to cover these premiums?
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