For English tenancies, The Tenant Fees Act comes into force from 1 June 2019. This will make it illegal for landlords and letting agents to charge certain fees in connection with a tenancy. The only payments that can be charged are rent, a refundable tenancy deposit, a refundable holding deposit, payments to change a tenancy and those associated with early termination of a tenancy (both when requested by the tenant), payments for certain utilities and services and default fees for late payment of rent and replacement of lost keys.
A breach of this legislation can be considered a civil offence, with a financial penalty of up to £5,000. Any further breaches within five years could result in a criminal conviction, a banning order and an unlimited fine. If a local authority chooses not to prosecute they can impose a financial penalty of up to £30,000 as an alternative. The government has issued detailed guidance for Landlords and Letting Agents, Tenants and Enforcement authorities which you can find here. The Welsh government is introducing separate legislation for Welsh tenancies. A key part of the new legislation is that tenancy security deposits will now 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.
> You're not required to re-serve Prescribed Information
> There are no special provisions or exemptions if the tenant has a pet. The maximum deposit amount allowed must still fall within the compliance thresholds above.
In order for you to check if your custodial deposits exceed the deposit cap, we've created our Deposit Cap Calculator. Landlords and letting agents can use it to calculate how much they need to reduce their deposits by (if at all) and we'll take care of any changes that need to be made. If you have deposits for several tenancies you want to bring into line with the deposit cap, you can do this in one go, regardless of when the tenancies are due to be renewed. Simply download the Deposit Cap Calculator.