How To Budget For Permitted UK Tenant Fees Under Current Law

Navigating the rental market can be financially daunting, especially when trying to understand what you can legally be charged. Learning how to budget for permitted UK tenant fees under current law is essential for protecting your hard-earned finances during a move.

The introduction of the Tenant Fees Act 2019 fundamentally changed the financial landscape for renters across England. It banned most upfront charges, ensuring you only pay for what is strictly permitted.

This comprehensive guide breaks down exactly what you should expect to pay, how to calculate these costs, and how to spot illegal charges. Please note that while we advocate for tenants, we are not lawyers, and this guide does not constitute formal legal advice.

Understanding the Tenant Fees Act 2019

Before you can build an accurate moving budget, you must understand the legislation governing tenant fees. The Tenant Fees Act 2019 applies to all assured shorthold tenancies, licences to occupy, and student accommodation in England.

The law operates on a simple premise: if a payment is not explicitly listed as a “permitted payment,” it is automatically prohibited. This prevents landlords and letting agents from charging hidden administrative costs.

It is worth noting that Scotland and Wales have their own distinct legislation. However, the core principle remains the same across the UK: the banning of arbitrary tenancy setup fees.

Permitted Upfront Tenancy Costs

When budgeting for a new home, the vast majority of your initial expenditure will fall into three main categories. These are the legal upfront costs you must plan for.

The Holding Deposit

A holding deposit is paid to reserve a property while the landlord or agent completes their referencing checks. Under current law, this fee is strictly capped at one week’s rent.

For example, if your monthly rent is £1,000, your weekly rent is roughly £230. Therefore, your maximum holding deposit is £230. The landlord must apply this money towards your first rent payment or your refundable tenancy deposit once the agreement is signed.

If you pull out of the tenancy without a valid reason, the landlord can keep this money. However, if the landlord pulls out, or if you fail referencing through no fault of your own, it must be refunded to you within seven days.

The Refundable Tenancy Deposit

The tenancy deposit is your financial safety net against property damage or unpaid rent at the end of your tenancy. The law strictly caps this amount based on your total annual rent.

• For annual rent under £50,000: The deposit is capped at a maximum of five weeks’ rent.
• For annual rent of £50,000 or more: The deposit is capped at a maximum of six weeks’ rent.

Your landlord or letting agent is legally required to protect this money in a government-backed tenancy deposit scheme within 30 days of receiving it. You can find more information on deposit protection on the GOV.UK website.

Advance Rent

Landlords will typically require your first month’s rent in advance before you collect the keys. While technically classified as rent rather than a “fee,” it is a vital part of your initial budget.

Some landlords may ask for rent in advance for longer periods, especially if you have a poor credit history. While legally permitted if agreed upon, you should negotiate this where possible to ease your upfront cash flow.

Permitted Ongoing and Default Fees

Your budgeting shouldn’t stop at the move-in day. Current law allows landlords to charge specific ongoing and default fees, provided they are explicitly detailed in your tenancy agreement.

Utilities and Council Tax

You are legally permitted to be charged for the ongoing running costs of the property. This includes council tax, gas, electricity, water, broadband, and a TV licence.

Always check whether your rent is “bills included” before signing. If they are not included, you must factor these monthly costs into your overarching household budget.

Payments for Defaults

Default fees are charges incurred when you breach a term of your tenancy agreement. These are permitted, but only if they are written into your contract and meet strict reasonableness tests.

Late rent payments: A landlord can only charge interest on late rent if the payment is more than 14 days overdue. The interest rate cannot exceed 3% above the Bank of England’s base rate.

Lost keys: If you lose your keys, the landlord can charge you for the reasonable cost of replacing the locks or keys. They cannot charge an arbitrary penalty fee.

Variation and Surrender Fees

If you request a change to your tenancy agreement—for example, asking to keep a pet or changing a move-out date—the landlord can charge a variation fee.

This fee is capped at £50. However, if the landlord can provide evidence that their reasonable costs exceed this amount, they can charge a higher fee. If you ask to end your tenancy early, a surrender fee applies under the same £50 or reasonable costs rule.

How to Calculate Your Total Move-In Budget

Creating a realistic budget requires adding up your permitted upfront costs and adding a contingency for potential default fees. Managing your rental paperwork can be stressful, but platforms like PadAudit can help you stay organised and keep all your tenancy information in one secure place.

Do not forget to budget for physical moving costs. While removal companies and van hires are not tenancy fees, they are essential moving expenses that often catch tenants off guard.

Additionally, set aside a small emergency fund. If you accidentally lock yourself out or need to pay a small variation fee later in the year, having a financial buffer will prevent stress.

Identifying Prohibited Tenancy Fees

Just as important as budgeting for legal fees is knowing what to refuse. Despite the 2019 Act, some unscrupulous agents still attempt to charge prohibited fees.

The following charges are strictly illegal under the Tenant Fees Act 2019:

• Administration fees for setting up the tenancy.
• Referencing and credit check fees.
• Inventory and check-in check-out fees.
• Charges for providing a guarantor.

If a landlord or agent attempts to charge you any of these, they are breaking the law. Local trading standards authorities enforce the Act and can issue substantial financial penalties to non-compliant landlords.

If you are being pressured to pay an illegal fee, you should seek immediate guidance from the Citizens Advice bureau.

What to Do if Charged an Illegal Fee

If you have already paid a prohibited fee, you are entitled to request a refund. You should write to your landlord or letting agent immediately, citing the Tenant Fees Act 2019.

Keep a written record of all communications. If they refuse to refund the money, you can report them to your local trading standards office or the independent redress scheme they belong to.

By understanding your rights and calculating your permitted costs accurately, you can navigate the rental market with confidence. Never sign a contract or hand over money until you have verified that every charge is fully compliant with current UK law.

Frequently Asked Questions

Can a landlord charge me for a credit check?

No. Under the Tenant Fees Act 2019, all referencing fees, including credit checks and employer references, are strictly prohibited. The landlord must absorb these costs as a normal business expense.

Is there a cap on the tenancy deposit I can be charged?

Yes. The law caps the refundable tenancy deposit at five weeks’ rent if your annual rent is below £50,000. If your annual rent is £50,000 or above, the cap increases to six weeks’ rent.

Can I be charged for paying rent a few days late?

No. A landlord can only charge interest on late rent payments if the rent is more than 14 days overdue. Furthermore, the interest rate charged cannot exceed 3% above the Bank of England’s base rate.