Round #1124

Letting agent in Liverpool is requiring prospective tenants to pay £225 described on the invoice as "tenant referencing fee, including credit-check and right-to-rent verification". Tenancy commenced 1 May 2025. Tenant paid the £225 in cash on 8 April 2025. Is the £225 a prohibited payment under schedule 1 of the Tenant Fees Act 2019 and if so what is the consequence?

## Analysis under the Tenant Fees Act 2019 ### Is the £225 a Prohibited Payment? **Yes, unambiguously.** --- ### Legal Framework **Section 1 and Schedule 1, Tenant Fees Act 2019** provide that a landlord or letting agent must not require a "relevant person" (which includes a prospective tenant) to make a **prohibited payment** in connection with a tenancy of residential property. Only payments **expressly permitted** by Schedule 1 are lawful. Everything else is prohibited by default. **Schedule 1 lists the only permitted payments:** 1. Rent 2. A refundable tenancy deposit (capped at 5 weeks' rent, or 6 weeks' if annual rent ≥ £50,000) 3. A refundable holding deposit (capped at 1 week's rent) 4. Payments in default (e.g. late payment interest, lost key charges) 5. Variation, assignment or novation of a tenancy (capped at £50) 6. Early termination at tenant's request 7. Council tax, utilities, TV licence, communication services (if included in the tenancy) **A tenant referencing/credit check/right-to-rent verification fee does not appear anywhere in Schedule 1.** It was precisely this type of charge — commonplace before 2019 — that the Act was designed to abolish. The description on the invoice does not alter the legal classification. The tenancy is an **assured shorthold tenancy** of residential premises, the tenant is a relevant person, and the payment was required as a condition of or in connection with the grant of the tenancy. All elements of a prohibited payment under **s.1(1) TFA 2019** are satisfied. --- ### Consequences #### 1. Civil Penalty — s.12 and Schedule 2 TFA 2019 - Liverpool City Council (as the local weights and measures authority) **may impose a financial penalty.** - **First offence:** up to **£5,000** per prohibited payment. - **Second or further offence within 5 years:** up to **£30,000** and the agent is treated as having committed a **criminal offence** under s.12(5), and may also be entered on the **Rogue Landlord/Agent Database** maintained under the Housing and Planning Act 2016. #### 2. Right to Recover the Payment — s.14 TFA 2019 - The **£225 is recoverable by the tenant** as a civil debt. The tenant may bring a claim in the County Court. - Alternatively, the tenant may apply to the **First-tier Tribunal (Property Chamber)** for a recovery order. #### 3. Prohibition on Retaining the Payment — s.2 TFA 2019 - The agent commits a further breach if the payment is **not repaid** once demanded. Retention of a prohibited payment is itself a prohibited payment under s.2. #### 4. Enforcement Bar on Serving a Section 21 Notice — s.17 TFA 2019 - A landlord **cannot validly serve a section 21 "no-fault" possession notice** while any prohibited payment has been taken and not repaid in full. This is a significant practical consequence for the landlord/agent. #### 5. Trading Standards / Redress Scheme Implications - Letting agents in England are required by law to be members of a **government-approved redress scheme** (Property Ombudsman or Property Redress Scheme). The tenant may bring a complaint there. - The conduct will also be relevant to the agent's fitness under **s.22 Estate Agents Act 1979** and potential prohibition orders. --- ### Practical Advice to the Tenant | Step | Action | |---|---| | **Immediately** | Write to the agent demanding repayment of £225 in full, citing s.1 and s.14 TFA 2019 | | **If refused** | Report to Liverpool City Council Trading Standards for enforcement | | **Recover the money** | Apply to First-tier Tribunal or County Court | | **Preserve evidence** | Keep the invoice, cash payment receipt, and all correspondence | --- ### Summary The £225 charge is a **clear and straightforward prohibited payment**. There is no ambiguity. The Tenant Fees Act 2019 was enacted specifically to abolish charges of exactly this type. The tenant is entitled to a **full refund**, the agent faces a **civil penalty of up to £5,000** (and up to £30,000 on a repeat offence), and the landlord's **section 21 rights are suspended** until repayment is made.

## Analysis ### Is the £225 a Prohibited Payment? **Yes, unequivocally.** The Tenant Fees Act 2019 ("TFA 2019") came into force on 1 June 2019 for new tenancies in England. Schedule 1 TFA 2019 sets out an exhaustive list of **permitted payments**. Any payment required by a landlord or letting agent in connection with a tenancy that does not fall within Schedule 1 is a **prohibited payment** under s.3 TFA 2019. The permitted payments under Schedule 1 are: 1. Rent 2. A refundable tenancy deposit (capped at 5 weeks' rent, or 6 weeks' if annual rent exceeds £50,000) 3. A refundable holding deposit (capped at 1 week's rent) 4. Payments in default (e.g. late payment interest at ≤3% above Bank of England base rate; reasonable key-replacement costs) 5. Payments to vary, assign or novate a tenancy (capped at £50) 6. Payments on termination at the tenant's request (capped at landlord's/agent's actual loss) 7. Council tax, utilities, TV licence, communication services where required by the tenancy agreement A **tenant referencing or credit-check fee is not listed anywhere in Schedule 1**. It was precisely this type of charge — administrative fees passed on to tenants to recover the agent's business costs — that the TFA 2019 was enacted to abolish. The labelling of part of the fee as covering "right-to-rent verification" does not alter this analysis: right-to-rent checks are a statutory duty imposed on the landlord/agent under s.22 Immigration Act 2014 and cannot be monetised by charging it to the prospective tenant. That obligation is the landlord's/agent's cost of doing business, not a service rendered to the tenant. The tenancy commenced 1 May 2025 and the TFA 2019 applies to all assured shorthold tenancies in England entered into on or after 1 June 2019. **The entire £225 is a prohibited payment.** --- ### Consequences **1. Duty to Repay (s.2 and s.4 TFA 2019)** A landlord or letting agent must not require a prohibited payment as a condition (express or implied) of granting, renewing or continuing a tenancy. The £225 must be **repaid in full to the tenant**. The tenant can demand repayment at any time. **2. Civil Penalty — Trading Standards (s.12 TFA 2019 and Schedule 2)** Liverpool City Council's Trading Standards or Housing department is the enforcement authority. It may impose a **civil penalty of up to £5,000** for a first breach. If a further breach is committed within 5 years of a final penalty notice for a prior breach, the penalty rises to **up to £30,000** and the agent may be treated as having committed a **banning order offence** under s.14-21 Housing and Planning Act 2016. **3. Unbanning Order / Banning Order Exposure** A second or subsequent breach can lead the First-tier Tribunal (Property Chamber) to make a **banning order** preventing the agent from letting or managing residential property (Housing and Planning Act 2016, s.16). **4. Enforcement Register** Any financial penalty imposed must be recorded on the **Rogue Landlord and Agent Database** (Housing and Planning Act 2016, s.30). **5. Effect on the Tenancy** The tenancy itself is **not void** by reason of the prohibited payment. The tenant retains the tenancy. The prohibition on requiring the payment does not invalidate the underlying tenancy agreement. --- ### Practical Steps for the Tenant - Write to the agent formally demanding repayment of £225, citing s.3 TFA 2019 and Schedule 1. - If not repaid promptly, file a complaint with **Liverpool City Council Trading Standards**. - The tenant may also apply to the **First-tier Tribunal (Property Chamber)** for a determination and order for repayment under s.14(4) TFA 2019. - Retain the cash payment receipt/invoice as evidence.