Commentary on provisions of Act Schedule 1: Permitted Payments
The list of permitted payments set out in this Schedule is exhaustive. Any other payment a landlord or letting agent requires in connection with a tenancy to themselves or a third party which is not described in this Schedule is prohibited.
	The permitted payments are:
the rent;
a refundable tenancy deposit of no more than five weeks’ rent where the annual rent for the property is less than £50,000 or a refundable tenancy deposit of no more than six weeks’ rent where the annual rent for the property is £50,000 or more;
a refundable holding deposit of no more than one week’s rent;
a payment that is required in the event of a default by the tenant for a lost key, a lost security device giving access to housing or a payment of rent that is late by 14 days or more;
payments on assignment, variation or novation of a tenancy at the tenant’s request, capped at £50 or the reasonable costs incurred if greater;
payments in respect of early termination of a tenancy agreement at the tenant’s request capped at the landlord’s loss;
payments to a local authority in respect of council tax;
payments in respect of energy and other utilities;
payments to the BBC in respect of a television licence; and
payments in respect of communication services.
	Paragraph 1 of this Schedule sets out that where any payment of rent is greater than the amount of rent payable in a later period during the tenancy, the difference is a prohibited payment. This applies unless the rent has been varied by subsequent agreement between the landlord and the tenant or in accordance with a rent review section in the tenancy agreement that enables both an upward or downward variation of the rent.
	A tenancy deposit under paragraph 2 is money intended to be held for the duration of the tenancy as security for performance of any obligations of the tenant and the discharge of any liability on the part of the tenant arising under or in connection with the tenancy.
	A holding deposit under paragraph 3 is a payment made by or on behalf of a tenant to a landlord or agent to ‘reserve’ that property. The holding deposit demonstrates a tenant’s intention to rent a certain property. Acceptance of a holding deposit confirms the landlord or letting agent’s intention to accept an individual as a tenant (subject to the satisfactory completion of reference checks etc.). A landlord or letting agent may not accept more than one holding deposit for the same housing unless they have previously had grounds to retain an earlier holding deposit.
	Landlords and letting agents may require a tenant to make a payment in the event of a default. Such a payment is only a permitted payment in the circumstances of the loss of a key, a lost security device to give access to housing of for late payment of rent where that payment has been outstanding for 14 days of more. The amount charged for a lost key or security device giving access to housing cannot exceed the reasonable costs incurred by the landlord or agent, which must also be supported by evidence provided in writing to the person who is liable for the payment.
	In the case of a payment in the event of a default for late payment of rent, landlords and agents cannot charge interest at more than an annual percentage rate of 3% above the Bank of England's base rate for each day that the payment is outstanding. Further, a landlord and agent cannot both require a tenant to pay a payment in the event of a default for late payment of rent.
	Paragraph 5 clarifies that the Act does not impact on a landlord or agent's right to recover damages for breach of contract of a tenancy agreement or agreement with the letting agent.
	Landlords and letting agents may require a payment for assignment, variation, or novation of a tenancy which was at the tenant’s request. Under paragraph 6 this is capped at either £50 or the reasonable costs incurred if greater.
	Landlords and letting agents may also require a payment for an early termination of the tenancy agreement at the tenant’s request. Under paragraph 7 the payment may not exceed the loss suffered by the landlord or, if applicable the letting agent’s reasonable costs.
	Landlords and letting agents may require a payment for council tax to the local authority (paragraph 8).
	Landlords and letting agents can require a payment in respect of utilities. Such payments include electricity, gas or other fuel, water and sewage and payments towards energy efficiency improvements under a Green Deal plan (paragraph 9).
	Landlords and letting agents may require a payment to the BBC in respect of a television licence (paragraph 10).
	Landlords and letting agents may require a payment in respect of communication services including telephone, internet, cable television and satellite television (paragraph 11).