My letting agent just sent me a bill for 'renewal fees' for extending a tenancy agreement – is this even allowed anymore since the tenant fee ban in 2019, or are they trying to pull a fast one?
Quick Answer
Since the Tenant Fees Act 2019, tenants cannot be charged renewal fees. However, letting agents can charge landlords for renewal services, provided this was part of their agreed terms. Review your agency agreement carefully.
## Understanding Letting Agent Fees for Tenancy Renewals
The Tenant Fees Act 2019 made it illegal for letting agents to charge tenants renewal fees for extending tenancy agreements. However, landlords can still be charged for services provided by their letting agent, including the administration involved in renewing a tenancy agreement, provided these fees are clearly outlined and agreed upon in the agency contract.
This distinction is critical for investors. The ban primarily protects tenants from unexpected or excessive charges. For landlords, the legality hinges on the contract between the landlord and the letting agent. If your agency agreement specifies a fee for tenancy renewals, and that fee reflects actual administrative work, it is likely legitimate from the agent's perspective. It's not about whether a fee is charged, but *who* is being charged and *what* it covers.
### Legitimate Charges for Landlords
When a letting agent sends a landlord a bill for 'renewal fees,' it typically covers the administrative work involved in extending a tenancy. This might include:
* **Drafting new contracts:** Preparing an updated Assured Shorthold Tenancy (AST) agreement.
* **Negotiating terms:** Liaising between landlord and tenant on rental increases or other terms.
* **Legal compliance checks:** Ensuring the new agreement adheres to current legislation, including the Renters' Rights Act 2025 which abolished Section 21 evictions from 1 May 2026.
* **Deposit protection updates:** Notifying the scheme if details change or extending protection.
For instance, an agent might charge £150 plus VAT for drafting and executing a new 12-month AST, reflecting their time and expertise. This would be a legitimate charge to the landlord if agreed in the agency contract.
### What the Tenant Fees Act 2019 Prohibits
The Tenant Fees Act 2019 stipulates that landlords and letting agents cannot charge tenants for:
* **Tenancy renewal fees:** This explicitly includes any charge for renewing or extending a tenancy agreement.
* **Referencing fees:** Charges for credit checks or verifying tenant suitability.
* **Inventory fees:** Costs associated with creating an inventory report.
* **Professional cleaning fees:** Except in specific, limited circumstances related to damage.
If your agent has attempted to charge your tenant a renewal fee since the Act came into force, they would be acting illegally. The Act only permits holding deposits, tenancy deposits (capped at 5 or 6 weeks' rent), rent, and default fees for late payment or lost keys, as well as council tax and utility payments, to be charged to tenants.
## Potential Issues with Renewal Fees for Landlords
While landlords can be charged renewal fees, there are several areas where these charges can become problematic or unreasonable:
* **Undisclosed Fees:** If the fee was not clearly stipulated in the initial agency agreement you signed, or if it has been introduced subsequently without your explicit agreement, it may not be enforceable. Always refer to your signed contract.
* **Excessive Charges:** While a fee for administration is allowed, an exorbitant fee might be challenged. For example, a £500 fee for a simple agreement extension could be considered disproportionate to the actual work involved when compared to market rates for similar services.
* **Lack of Service:** If your agent charges a renewal fee but provides no discernible service in return (e.g., merely allowing a fixed-term contract to roll into a periodic tenancy without any new paperwork or negotiation), the legitimacy of the charge is questionable. The fee must be for a service rendered.
### Example Scenarios:
* **Scenario 1: Clear Contractual Fee.** Your agency agreement states a £120+VAT fee for tenancy renewals. The agent issues a new 12-month AST, and you are billed. This is typically legitimate. The £144 charge is expected and covers the agent's administrative time.
* **Scenario 2: Undisclosed Fee.** Your contract does not mention renewal fees. The agent charges you £100 for an extension. You should query this, as it wasn't agreed upon, making it difficult to enforce.
* **Scenario 3: Tenant Charged.** Your agent attempts to charge the tenant £75 for renewing their tenancy. This is illegal under the Tenant Fees Act 2019, and you should intervene immediately to ensure the charge is reversed and your agent complies with the law.
## Investor Rule of Thumb
Regularly review your letting agent's contract and fee structure to ensure all charges, especially for renewals, are transparent, agreed upon, and reflect genuine services provided to you, the landlord.
## What This Means For You
Since the Tenant Fees Act 2019, your letting agent cannot charge your tenant any renewal fees. If they are billing *you* for a renewal fee, you need to check your agency agreement for clarity on what was agreed. Most landlords face unexpected costs not because fees are inherently illegal, but because they haven't thoroughly reviewed their contracts. Inside Property Legacy Education, we provide guidance on scrutinising such agreements to protect your investment returns and ensure compliance with UK legislation.
Steven's Take
The Tenant Fees Act 2019 was a significant shift, specifically designed to protect tenants from various charges. As a landlord, you need to differentiate between what an agent can charge a tenant and what they can charge you. Your agency contract is the key document here. I've always insisted on clear, itemised breakdowns of services and associated costs before signing any management agreement. Don't assume anything; challenge any fee that isn't transparent or wasn't previously agreed. Ensuring your agent is compliant also protects you from potential penalties if they break the law regarding tenant fees.
What You Can Do Next
1. Review Your Agency Agreement: Locate the management contract you signed with your letting agent. Look for clauses detailing fees for tenancy renewals, extensions, or administrative tasks. This document forms the basis of your legal agreement.
2. Compare Fees to Services: If a renewal fee is present, assess whether the amount seems reasonable for the work involved, such as drafting new paperwork or negotiating terms. If in doubt, compare it with fees charged by other local agents for similar services.
3. Communicate with Your Agent: If the fee is not in your contract, or you believe it is excessive, contact your letting agent in writing (email is fine) to query the charge. Request a detailed breakdown of the services the fee covers and refer to your agency agreement.
4. Check for Tenant Fee Act Compliance: Confirm that your agent has not attempted to charge your tenant any renewal or prohibited fees, as this is illegal under the Tenant Fees Act 2019. You can find details of prohibited payments on gov.uk/tenant-fees-act.
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