Tenancy Prohibited Payments

The Tenant Fees Act 2019 came into force on 1 June 2019. Broadly, a landlord or agent must not “require” any tenant or prospective tenant to make a “prohibited payment”. A “prohibited payment” is any payment which is not permitted by Sch.1, 2019 Act (s.3). Permitted payments include rent, deposits (holding and full tenancy) and utility costs. Transitional provisions provide that the Act does not apply to requirements “imposed” on tenants before the coming into force of the Act.

A landlord who has received a prohibited payment may not serve notice under s.21, Housing Act 1988 (“no fault/notice only” ground for possession) unless the payment is first returned to the tenant. Additionally, a local authority has power to punish breaches of the Act by way of a fixed penalty notice or prosecution.

In 2018, Ms Switaj became the assured shorthold tenant of Mr McLenaghan. In accordance with the terms of her tenancy, she had to pay an “administration fee” in respect of the preparation of the tenancy agreement and a “check-out fee” in respect of the anticipated costs of an end-of-tenancy inspection. The parties entered into a fresh tenancy in 2021. Under that agreement, there was no requirement to pay either the administration fee or check-out fee. The landlord later sought to recover possession pursuant to s.21, Housing Act 1988.

Ms Switaj defended those proceedings contending that: (a) the monies paid in respect of the administration fee and check-out fee would, if paid after 1 June 2019, have been prohibited payments; and, (b) although they had been paid in 2018, they were still being held by the landlord and should be treated as applicable to the 2021 tenancy, so that the prohibition on serving notice applied. The landlord did not dispute that the sums would fall within s.17, had they been demanded after 1 June 2019 but contended that they were payments which related to the 2018 tenancy and not the 2021 tenancy, so that the 2019 Act did not apply. The county court found for the landlord and Ms Switaj appealed.

In Switaj v McClenaghan [2024] EWCA Civ 1457 the Court of Appeal dismissed an appeal. The obligation to make the payments arose under the 2018 tenancy and were not replicated in the 2021 tenancy. In order for the Act to apply, the payments had to be “required” or “imposed” under the 2021 tenancy, which they were not.

For advice on litigation, court matters and tenant evictions please contact Oliver Kew at Hewetts Solicitors (Solicitors in Reading) at o.kew@hewetts.co.uk.

Published on 15/01/2025