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Deposits, rent and fees
What happens if a letting agent charges a prohibited fee? Repayment, the £5,000 penalty and the five-year rule
A tenant can recover a prohibited payment, and the council can add a penalty of up to £5,000, or £30,000 for a second breach. The steps, with dates.
The tenant can get the money back through the council or a tribunal, and the council can add a financial penalty of up to £5,000. If the same agent or landlord breaches the Tenant Fees Act 2019 again within five years, the second breach is a criminal offence: the council can prosecute, or impose a penalty of up to £30,000 instead. The figures are in sections 8 and 12 of the Act.
What counts as a prohibited payment
GOV.UK lists the payments a tenant can be asked for and then says: "You cannot charge your tenant any payment that is not on this list." Three kinds of charge fall outside it:
A fee that is not on the list at all. Referencing, inventory, check-in, check-out, renewal and administration fees are the usual ones.
The part of a permitted payment that goes over its cap. Schedule 1 says "the amount of the excess is a prohibited payment". On a let at £1,250 a month:
| What was charged | The limit | Prohibited part |
|---|---|---|
| A tenancy deposit of £1,562.50 | £1,442.30 (five weeks' rent) | £120.20 |
| A holding deposit of £312.50 | £288.46 (one week's rent) | £24.04 |
| A flat £25 fee for rent due on 20 October and paid on 19 November | £6.70 of interest | £18.30 |
| £120 to add a sharer, where the work cost no more than £50 | £50, or reasonable costs if they are higher | £70 |
| A £150 check-out fee | Not on the list | £150 |
| A month's rent taken before the agreement was signed | No rent before signing | £1,250 |
The first three sums are worked through in our guides to the deposit cap, holding deposits and late rent interest.
A purchase the tenant is made to make. Section 1 bars a landlord from requiring a tenant to take out insurance, sign a contract for a service with someone else, or make a loan. GOV.UK's examples are a professional guarantor service, a deposit replacement product and an inventory service. A tenant can choose any of them; the breach is requiring it.
The cheapest point to fix it
GOV.UK says: "If you don't return the fee when requested, the tenant or their representative can report you." Repaying on request, and recording the date, costs the fee and nothing more. After that the tenant has two routes.
- The council. It can investigate, impose the penalty and require the payment to be returned to the tenant (section 10).
- The First-tier Tribunal. Under section 15 the tenant can apply for an order that the payment be repaid. The order must give at least 7 and at most 14 days, starting the day after it is made, and it is enforced through the county court.
It is one route or the other: section 10 stops the council requiring repayment once the tenant has applied to the tribunal, and section 15 closes the tribunal once the council has required repayment or begun criminal proceedings.
Money already put towards the rent or the deposit with the tenant's consent does not have to be repaid again. Since 1 May 2026 the council's version of that exception no longer covers rent taken before the tenancy was entered into.
The council's penalty, with dates
Schedule 3 sets the steps. The council must be "satisfied beyond reasonable doubt" of the breach and can impose only one penalty for it.
| Step | The rule in Schedule 3 | Example |
|---|---|---|
| Notice of intent | Served within 6 months of the first day the council has sufficient evidence | Served Monday 2 November 2026 |
| Your written representations | 28 days, starting the day after the notice was served | By 30 November 2026 |
| Final notice | Sets the penalty and the reasons | Served Monday 7 December 2026 |
| Repayment to the tenant | A period of 7 to 14 days, starting the day after the final notice | Between 14 and 21 December 2026, as the notice says |
| Pay the penalty, or appeal | 28 days, starting the day after the final notice | By 4 January 2027 |
An appeal goes to the First-tier Tribunal inside the period for payment. It is a re-hearing, the notice is suspended until it is decided, and the tribunal can quash, confirm or vary the penalty.
A second breach within five years
Section 12 makes it an offence to breach section 1 (landlords) or section 2 (letting agents) where a penalty has already been imposed for a different breach of the same section and the new breach falls "within the period of five years beginning with the day on which the relevant penalty was imposed". That day is the date of service given in the final notice.
Suppose an agency had a final notice served on 3 March 2025 for an inventory fee. The five years run to 2 March 2030. A check-out fee required on 12 October 2026 is inside them, so the council has a choice: prosecute, or impose a penalty of up to £30,000. It cannot do both for the same breach.
GOV.UK says the fine on conviction is unlimited, and that the offence is a banning order offence, which can stop a person letting or managing property and put them on the rogue landlord database.
A breach of the holding deposit rules in Schedule 2 carries the penalty of up to £5,000. Section 12 names only sections 1 and 2.
The pounds at stake for one £150 fee
| Stage | Cost to the agency |
|---|---|
| Repaid when the tenant asks | £150 |
| Council penalty, first breach | £150 and up to £5,000 |
| Second breach within five years | £150 and up to £30,000, or prosecution and an unlimited fine |
What to do in the office this month
- Put GOV.UK's list next to your fee schedule, your tenancy agreement and your application pack. Strike out anything that is not on it.
- Check the published fee list. GOV.UK says letting agents must publish their fees on their website. Our website audit lists other phrases to remove.
- When a tenant asks for a fee back, decide within the week and write down the date it was repaid.
- Keep any penalty notice and diarise the five-year date.
This is general information for England, not legal advice.
Where this comes from: Tenant Fees Act 2019 sections 1, 8, 10, 12 and 15, Schedule 1 and Schedule 3 (legislation.gov.uk); GOV.UK "Fees you can charge as part of a tenancy" (updated 7 July 2026); all read 2026-10-02.
AEO Lookup editorial team
We write practical guides for people who run small UK firms, and we check every fact against its source on the date shown. Read how we review, or tell us if something has changed.
