Student tenancies and licences: significant legislation

Tenant Fees Act 2019

This will apply to all new lettings from 1 June 2019 and will apply to existing lettings from 1 June 2020.

It expressly applies to all student tenancies granted by Universities and to licences to occupy housing where the premises are occupied as a “dwelling”. The term “dwelling” does not have a fixed definition in law, leading to some uncertainty about whether it will apply to all types of student accommodation. Caution is recommended, however, in light of the penalties for non-compliance.

The Act will prohibit landlords or their letting agents from requesting any payments from their tenants unless the payments are permitted under the Act.

Rent is a permitted payment under the Act, however if the rent charged in a particular rental period is more than the amount charged in a later period, the additional amount will not be permitted, unless the rent being sought is proportionate to the length of the period. This will need to be kept in mind when charging varying amounts of rents to students for different semesters.

Other permitted payments include: deposits (limited to certain amounts); payments in the event of default (only for losing keys/security devices or for failure to pay rent where the agreement specifically states the landlord can charge in these circumstances); payments on variation, assignment or novation of a tenancy (up to a maximum of £50 or, if higher, the actual reasonable costs to the landlord); payments on termination of a tenancy; and payments for council tax, utilities, television licences and communication services.

Breaching the Act has serious consequences. A first breach can lead to a civil penalty of up to £5,000. A second breach is a criminal offence and can lead to an unlimited fine (or a civil penalty of up to £30,000 if the local authority decides not to prosecute the criminal offence).

Mills & Reeve has produced a detailed guide to the Tenant Fees Act 2019 tailored for University clients and is happy to advise on whether a University’s precedent accommodation agreement contains any payments that will be prohibited under the Act.

This will apply to all new leases (of less than 7 years) from 20 March 2019. The lease must be of a dwelling let wholly or mainly for human habitation. This does not include licences, and so will not cover certain types of student accommodation.

The Act introduces an implied covenant by the landlord that the dwelling is fit for human habitation at the time of the grant of the lease (or at the beginning of the term) and will remain fit during the term.

Landlords will have an implied covenant to be able to enter the dwelling at reasonable times of the day to inspect the condition of the property upon giving 24 hours’ written notice to the occupier.

However the landlord will not be required to remedy unfitness when:
- the problem is caused by the tenant’s behaviour or their possessions;
- the problem is caused by events like fires, storms or floods, which are completely beyond the landlord’s control;
- the landlord is unable to get required permissions, after making reasonable efforts; and
- the tenant is not an individual, eg. Educational institutions.

If a landlord fails to comply with the Act, tenants can take court action, which may result in the landlord being ordered to pay compensation or carry out the works necessary to improve the property.

Please note, this Act only affects Assured Shorthold Tenancies (“ASTs”). This is only relevant to those Universities which provide tenancies of accommodation through a management company and the management company is the landlord.

The Act applies in full to ASTs created on or after 1 October 2015 and in part to those created prior to that date.

Various obligations are placed on landlords and failure to comply may impact the ability of the landlord to serve a valid section 21 notice. Key obligations placed on landlords include:
- Landlords must supply tenants with a copy of the Department for Communities and Local Government ‘How to rent: The checklist for renting in England’ booklet at the start of their tenancy.
- Before the grant of an AST the landlord must give the tenant a copy of the energy performance certificate and most recent gas safety report.
- Deposits must be paid into a tenancy deposit scheme and landlord’s must comply with the initial requirements of the scheme and provide the prescribed information.

The Act includes other requirements and Mills & Reeve would be happy to provide further guidance.