Initial Rent, Payments and Tenant Fees

The Tenant Fees Act 2019 bans most fees charged to tenants, prospective tenants, and guarantors in England. In practice, you should work on the basis that you can only ask for money that the Act allows as a permitted payment.

This page sets out what you can and cannot charge, and (from 1 May 2026) the extra restrictions on taking rent for assured tenancies.

Who the rules apply to

The Act applies to certain lettings, including:

• assured periodic tenancies from 1 May 2026
• assured shorthold tenancies before 1 May 2026
• licences (for example, lodger arrangements)
• certain student lettings provided by a specified educational institution

Only a permitted payment may be requested from a “relevant person” (for example, a tenant, prospective tenant, or guarantor).

What you must not do

A landlord or letting agent must not require a relevant person (or anyone acting for them) to:

• make a prohibited payment to the landlord or agent in connection with a tenancy of housing in England
• make a prohibited payment to a third party in connection with a tenancy of housing in England
• enter into a contract with a third party in connection with a tenancy where that contract is for a service or insurance (except utilities or communication services, see below)
• make a loan to any person in connection with a tenancy of housing in England

Permitted payments

Permitted payments are listed in Schedule 1 of the Act:

• Rent
• Tenancy deposit
• Holding deposit
• Payment in the event of a default
• Payment of damages for breach of an agreement
• Payment on variation, assignment, or novation of a tenancy
• Payment on termination of a tenancy
• Payment in respect of council tax
• Payment in respect of utilities, etc.
• Payment in respect of a television licence
• Payment in respect of communication services

Rent

Rent is a permitted payment. However, the amount charged for an earlier period must not be greater than the amount for a later period. Any “excess” is a prohibited payment.

Example: if a tenancy starts on 1 July and the rent for July is £900 (period 1), then from 1 August it is £700 per month (period 2). The £200 difference is a prohibited payment (the £700 remains permitted).

Assured tenancies from 1 May 2026: no pre-signing rent, and limits on “initial rent”

From 1 May 2026, there are extra rules on taking rent for assured tenancies.

You cannot take rent before the tenancy is signed

Any rent relating to an assured tenancy is a prohibited payment if it is payable before the tenancy is entered into.

Do not ask for, require, or accept rent for an assured tenancy until the agreement has been signed (so it is legally binding). The tenancy does not need to have started yet.

This includes indirect collection methods. A landlord or agent must not:

• invite or encourage someone to make a prohibited pre-tenancy payment of rent
• accept an offer to make such a payment
• accept the payment itself (including via a third party)

After signing but before move-in: only limited “initial rent” can be taken

Once the tenancy is signed (and only in the period between signing and the start date), you can request initial rent.

Initial rent is limited to rent payable for:

• the first rent period, and
• any later rent period ending within the first 28 days of the tenancy (the “initial 28-day period”)

Anything beyond that is treated as prohibited pre-tenancy rent.

Examples

Monthly rent, rent day is the 1st. Tenancy is signed on 10 June and starts on 1 August.

• You can collect the August rent at any time after signing and before move-in.
• You cannot collect September rent early (it cannot be required or taken before 1 September).

Start date mid-month, rent day is the 1st. Tenancy is signed on 3 June and starts on 15 June. Rent is payable on the 1st.

• First rent period: 15 June to 30 June
• Next rent period: 1 July to 31 July
• Initial 28-day period: 15 June to 13 July

What you can take and when:

• You may take the rent for 15 June to 30 June after signing.
• You may not take the 1 July to 31 July rent before 1 July, because that rent period ends after 13 July.

Weekly rent Tenancy is signed on 20 July and starts on 1 August. Rent is weekly.

You may take all weekly rent periods that end within the initial 28-day period starting on 1 August, but not the first week that ends after day 28.

Ongoing “rent in advance” terms are ineffective

For assured tenancies, any term that makes rent due before the period it relates to is of no effect. This prevents ongoing rent-in-advance arrangements (beyond the limited initial rent above).

Tips to avoid problems

• Use calendar-monthly rent where possible.
• Set the tenancy start date to match the rent day.
• If a tenant wants to move in late in the month but rent is due on the 1st, consider starting the tenancy on the 1st instead.

Tenancy deposit

A tenancy deposit is a permitted payment, but it is capped at:

• five weeks’ rent where annual rent is under £50,000
• six weeks’ rent where annual rent is £50,000 or more

To calculate the cap: annual rent ÷ 52 = one week’s rent, then multiply by 5 or 6.

The deposit must still be protected and the prescribed information served within 30 days of receipt. In practice, it is usually cleaner to request the deposit once the tenancy is signed and binding.

Holding deposit

A holding deposit is a permitted payment taken before granting the tenancy (typically while checks are carried out).

Key points:

• Maximum is one week’s rent (annual rent ÷ 52)
• Only one holding deposit may be held at any one time for the same property
• There is a deadline for agreement: 15 days from receipt, unless extended by written agreement

The holding deposit must be repaid (by the person who received it) if:

• the landlord and tenant enter into a tenancy agreement (repay within seven days of the tenancy agreement), or
• the landlord decides not to enter into a tenancy agreement before the deadline (repay within seven days of the decision), or
• they fail to enter into a tenancy agreement before the deadline (repay within seven days of the deadline)

Instead of repaying it, the holding deposit can be credited toward the tenancy deposit or initial rent, but only with the payer’s agreement.

A holding deposit can be retained only in limited circumstances, including:

• the landlord is prohibited from granting a tenancy due to immigration status rules (and did not know and could not reasonably have been expected to know before taking the deposit), or
• the tenant provides false or misleading information that the landlord is reasonably entitled to take into account when deciding whether to grant the tenancy, or
• the landlord or agent takes all reasonable steps to enter into a tenancy, but the tenant doesn’t take reasonable steps to do so before the deadline for agreement, or
• the tenant notifies the landlord/agent before the deadline that they have decided not to proceed

If the landlord/agent intends to retain the holding deposit, they must give written notice to the payer within seven days. If they fail to do so, the holding deposit must be repaid (including if the tenant withdraws).

When should money be taken

A practical order that fits the rules is:

• Before signing: holding deposit (up to one week’s rent)
• After signing: initial rent and tenancy deposit (if taken) anytime after signing but before keys are handed over.

For assured tenancies, do not ask for or accept rent before signing, and do not ask for rent beyond the limited initial rent.

Payment in the event of a default

A landlord (or agent) may seek payment for a “relevant default”, meaning:

• loss of a key or other security device giving access to the dwelling, or
• failure to pay rent in full within 14 days beginning with the due date,

but only where the tenancy agreement requires payment.

Loss of a key

The cost must be reasonably incurred and backed up by written evidence. Any excess is a prohibited payment. In practice, provide the receipt or invoice.

Failure to pay rent in full

Interest is a permitted payment where rent is unpaid after the 14-day period. The interest rate is 3% above the Bank of England base rate (applied daily to the unpaid amount). The tenancy must include a term that allows this.

Payment of damages for breach of an agreement

Damages for breach of a tenancy agreement (or an agreement between a letting agent and a relevant person) are a permitted payment. Any term relied on must still be fair under the Consumer Rights Act 2015.

Payment on variation, assignment, or novation

Only if the tenant requests it. The payment must not exceed the greater of:

• £50, or
• the reasonable costs of the person to whom the payment is made

Any excess is a prohibited payment.

Payment on termination of a tenancy

Only if it is a payment to a landlord or agent in return for ending the tenancy at the tenant’s request (for example, leaving early or without giving the required notice).

The amount must not exceed the landlord’s loss or the agent’s reasonable costs arising from the termination. Any excess is a prohibited payment.

Council tax

A payment to a billing authority for council tax is a permitted payment.

Payment is permitted only to the billing authority (not to the landlord or agent).

Utilities and other fuel

Payment for utilities is permitted if the tenancy requires it, including:

• electricity
• gas
• other fuel
• water or sewerage

It is also a permitted payment for energy-efficiency improvements under a Green Deal plan.

Unlike council tax, there is no requirement to pay the utility supplier. However, resale of gas and electricity is governed by separate rules (it can only be resold at cost).

Television licence

Payment to the BBC for a television licence is a permitted payment if the tenancy requires it. Payment is permitted only to the BBC.

Communication services

Payment for a communication service is permitted if the tenancy requires it (landline telephone, internet, cable or satellite TV).

If the payment to the landlord exceeds the landlord’s reasonable costs of providing the service, the excess is a prohibited payment.

Prohibition on requiring a third-party contract

It is unlawful to require a relevant person to enter into a contract with a third party for:

• a contract for the provision of a service, or
• a contract of insurance

Prohibition on requiring a loan

It is prohibited to require a relevant person to make a loan in connection with a tenancy.

Alternatives

You cannot sidestep the Tenant Fees Act by saying “you don’t have to pay this, but you can if you want”. If a payment is prohibited, calling it “optional” does not make it acceptable.

You can offer a genuine choice in how a tenant (or other relevant person) meets a requirement.

If you give the relevant person the option to:

• make a payment, or
• enter into a contract, or
• make a loan,

as an alternative to complying with another requirement you impose, the Act does not treat that as you “requiring” the payment, contract, or loan.

This only works where the option is real and legitimate. It does not apply if:

• the other requirement would itself be prohibited by the Tenant Fees Act (ignoring this “alternative” point), or
• it would be unreasonable to expect the relevant person to comply with the other requirement.

Enforcement and penalties

Enforcement is carried out by local weights and measures authorities in England (and, in some cases, district councils).

Penalties:

• first offence: financial penalty up to £5,000
• second offence within five years: financial penalty up to £30,000, and it becomes a criminal offence; it is also a banning order offence

Any penalty is in addition to repaying prohibited payments or holding deposits.

A financial penalty can be enforced as if it were an order of the county court.

Restrictions on certain possession routes

Where the Tenant Fees Act restriction applies (old assured shorthold tenancies before 1 May 2026 or a small number of transitional after that date), a landlord may be prevented from using the relevant “no-fault” possession notice route until prohibited payments and/or unlawfully retained holding deposits have been repaid (or offset with the person’s consent).

Further guidance

Government guidance on the Tenant Fees Act is available at: https://www.gov.uk/government/publications/tenant-fees-act-2019-guidance