The new Tenants fees act 2019 and deposit reduction.

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    The new Tenants fees act 2019 and deposit reduction.

    im looking for some guidance regarding the new government legislation 'the tenant fees act 2019' I believe it's called specifically with regard to the capping of the deposit to the equivalent of 5 weeks rent ( down from the 'usual' 6 weeks).

    My letting agent has just advised me that agents had 2 options under the new act with regard to what to do with the deposit held at the DPS to keep them and their landlords compliant with the new act - either return part of the deposit, to bring the amount held down to 5 weeks, as and when a tenant renews their lease, or to return some of the deposit to all their clients tenants immediately. They have decided to take the latter option and are charging £75 plus vat per property to each landlord to do this!
    i have said I don't want them to do this and to only do it when necessary as tenants renew ( and I also think £75 is a bit steep!). They have argued it has to be done now if the renewal is due prior to 2020. I know the part of the act banning fees being charged to tenants comes into force 1st June 2019 but can see nowhere that it says agents must return the deposit immediately. I'm assuming it's a way for the agent to generate some income from landlords before the agents income drops after 2019. Can anyone throw any light on this please - is the agent correct, misinformed or simply trying it on?

    Thank you.

    Raymondus

    #2
    I think your agent will be looking for a new client, won't they?

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      #3
      Tell the agent to shove it.
      I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

      Comment


        #4
        The lease doesnt need to be renewed, it will just become rolling monthly periodic meaning almost no administration when the fixed term ends. Assuming this doesnt happen after 1 June in your case, it would probably be your best option so if I were you I would instruct your Agent accordingly

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          #5
          Even if it goes SPT after 1 June 2019, the new laws wouldn't applies due to it arising from a tenancy before that date. The agency is trying it on big time, both in the oh we have to do it, and that the landlord is liable to pay them anything to do it.
          I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

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            #6
            Yes thats right. Thanks for the correction

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              #7
              Ask your agent where the legislation is that states this (and if agent provides this, then please post it here)

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                #8
                I'll do that MdeB. My understanding is it applies to new tenancies or existing ones when they renew or by June 2020, whichever occurs first.

                Comment


                  #9
                  Originally posted by Raymondus View Post
                  it applies to ... existing ones ... June 2020
                  Still doesn't mean the amount of the deposit that have already been taken and protected before that date have to be reduced.

                  And even if it does, on what contractual or legal basis is the agent charging you for doing what the law requires them to do? Did you agree to a fee of £100 for them to process the deposit at the end of the tenancy, or did whatever you paid at the start of a tenancy already covered that?
                  I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                  Comment


                    #10
                    Originally posted by Raymondus View Post
                    I'll do that MdeB. My understanding is it applies to new tenancies or existing ones when they renew or by June 2020, whichever occurs first.
                    That's not correct.
                    The legislation explicitly excludes "requirements" imposed before the act becomes law or "imposed by or pursuant to a tenancy agreement entered into before the coming into force of [the legislation]."
                    So it's only applicable to a brand new lease.

                    Unless a new tenancy agreement changes the amount of the deposit, the deposit was imposed by a previous tenancy agreement.

                    The letting agent would actually create a situation where the new legislation applies if they changed the amount of the deposit on a new tenancy agreement.
                    So their advice isn't simply wrong, it's misleading - if you follow it, you're "caught" by regulations you wouldn't otherwise be.
                    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                    Comment


                      #11
                      Originally posted by jpkeates View Post
                      The legislation explicitly excludes "requirements" imposed before the act becomes law or "imposed by or pursuant to a tenancy agreement entered into before the coming into force of [the legislation]."
                      You are only quoting from S30(1) and S30(7), which also include "Subject as follows".
                      The following paragraphs apply the prohibition to all tenancies from June 2020, BUT they apply only to payments required to be made after that time, not to payments made before that time.

                      So, you are correct that deposits taken before that time are not affected (but any provision to increase the deposit when the rent increases would be affected if that made the deposit more than 5 weeks of new rent).

                      Comment


                        #12
                        Originally posted by jpkeates View Post
                        Unless a new tenancy agreement changes the amount of the deposit, the deposit was imposed by a previous tenancy agreement.
                        The amount of the deposit requried by a previous tenancy agreement is just that, for that tenancy. If you renew a tenancy on or after 1 June, then the amount of the deposit for the new tenancy is an amount imposed by the new tenancy agreement, and will be caught by the legislation. The whole Superstrike logic applies. That's why SPT arising after that date from a fixed term from before that date has to and is explicitly excluded.

                        I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                        Comment


                          #13
                          I have a concern that you'll turn out to be right, but I suggest that the wording is trying to avoid that.
                          There has to be some reason for the use of " imposed by or pursuant to a tenancy agreement entered into before the coming into force of [the legislation] ".

                          There has to be a reason that the two conditions are necessary (and the word "received" is avoided).
                          Taking pursuant to be in accordance with (i.e. it's normal meaning), the new deposit is in accordance with a previous tenancy agreement.

                          From superstrike we know a deposit is received again with each new tenancy - and "receipt" is the event that triggers the protection regulations.
                          Unless the deposit is changed, so a new value is imposed, the newly received deposit is in accordance with the original tenancy agreement - i.e. it arose then and continues in force.
                          So, while it is received again - and you could argue it's imposed by the new agreement, its existence is pursuant to a previous tenancy agreement.

                          I can't imagine why else "or pursuant to" needs to be there otherwise.

                          Superstrike makes me fear for my interpretation, but the wording of the legislation does give me reason to think that the drafters were trying to overcome the issue.

                          It'll be interesting to see what the deposit protection companies think, because, at present, there's no way to manage a part return from any of the custodial schemes, other than returning all of it and reprotecting, or returning some of it as though the retained amount were some kind of deduction.
                          Both of which require the cooperation of the tenant, and which would confuse the hell out of them.
                          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                          Comment


                            #14
                            We have been told by the DPS that they will be adding a feature to their website that allows a landlord or agent to return part of the deposit to bring the remaining amount within the 5 week limit.Assuming they actually manage to do it by 1st June then it should be a pretty simple process.

                            Comment


                              #15
                              Originally posted by jpkeates View Post
                              There has to be some reason for the use of " imposed by or pursuant to a tenancy agreement entered into before the coming into force of [the legislation] ".
                              I had interpreted "imposed by" as "has already happened" and "pursuant to" as "could be imposed in the future", and hence:
                              • 30(1)(a) applies to pre-tenancy charges (such as referencing), and
                              • 30(1)(b) applies to agreed tenancy charges (which may have been made already or may be due under the tenancy terms).

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