prohibited payments
📖 What is prohibited payments? Meaning and definition
In the context of UK tenancy law, a 'prohibited payment' refers to any sum of money a landlord or letting agent asks a tenant to pay that falls outside the scope of what is legally allowed. The Tenant Fees Act 2019 specifies which payments are permitted, and any charge not on that list is generally considered prohibited. This can include various types of charges, such as certain utility costs, fees for handling business deliveries, or administration charges.
These payments are deemed prohibited to protect tenants from excessive or unclear charges, ensuring that only legitimate costs are passed on. For instance, utility costs should typically be charged based on actual usage, and any lump sum or estimated charge for 'working from home' or 'business activity' utilities without evidence of actual usage can be challenged as prohibited.
The Act also bans outright any sums that are a condition for granting, continuing, assigning, terminating, or renewing a tenancy, including payments made to third parties. If a landlord demands a payment that is later determined to be a prohibited payment, the tenant may be able to recover that money. Tribunals, such as the First-tier Tribunal, are responsible for determining whether a payment is prohibited and can order its recovery.
An unregistered deposit, even if intended as an increased rent, can also be classified as a prohibited payment under the Tenant Fees Act 2019. Local authorities are empowered to review documents and evidence to determine if a breach of the Act has occurred, potentially leading to fines for landlords who demand prohibited payments.
📋 Requirements
- The payment must be demanded by a landlord or letting agent from a tenant.
- The payment must not be one of the 'permitted payments' as defined by the Tenant Fees Act 2019.
- Charges for utility costs must be based on actual usage, not assumptions or flat fees.
- Payments that are a condition for granting, continuing, assigning, terminating, or renewing a tenancy are banned.
- Administration charges are supplementary and generally prohibited.
📝 Procedure
- The tenant identifies a charge they believe is a prohibited payment.
- The tenant may provide a statement summarising their position and evidence.
- An application can be made under Section 15 of the Tenant Fees Act 2019 for recovery of the payment.
- A Tribunal reviews the evidence, such as statements, emails, and bank records.
- The Tribunal determines if the payment was prohibited and can order its repayment.
💡 Examples
- A landlord charging a tenant £200 for 'utility costs for working from home' without substantiating actual usage would be a prohibited payment.
- A one-off payment of £400 demanded by a landlord, which was determined to be an unregistered deposit rather than increased rent, was a prohibited payment.
- Charges for time spent by the landlord handling business deliveries, responding to messages, or creating documentation related to the tenancy are not permitted payments.
- An administration charge imposed as a condition for the continuance or renewal of a tenancy is a prohibited payment.
📚 Legal basis
- Tenant Fees Act 2019
❓ Frequently asked questions
What kind of payments are considered prohibited?
Prohibited payments include charges for estimated utility costs without evidence of actual usage, fees for landlord's time spent on tenancy-related tasks, administration charges, and any sums demanded as a condition for granting or continuing a tenancy that are not explicitly permitted by law.
Can a holding deposit be a prohibited payment?
Yes, if a holding deposit is improperly retained by the landlord, or if it exceeds legal limits, it can be considered a prohibited payment.
What if my landlord charges me for my business activities at home?
If your landlord charges you for 'utility costs for Business Activity' based on an incorrect assumption or without evidencing actual usage, this can be deemed a prohibited payment.
How can I recover a prohibited payment?
You can make an application under Section 15 of the Tenant Fees Act 2019 to a Tribunal for the recovery of all or part of a prohibited payment from your landlord. You will need to provide evidence to support your claim.
Are all payments to third parties prohibited?
The Tenant Fees Act 2019 bans outright any sums which are a condition on the granting of a continuance assignment termination or renewal of a tenancy, which includes payments to third parties, unless they are specifically permitted.
What happens if a landlord demands a prohibited payment?
If a landlord demands a prohibited payment, they may be in breach of the Tenant Fees Act 2019. Local authorities can issue notices and fines, and a Tribunal can order the repayment of the prohibited sum to the tenant.