The unintended consequences of the Tenant Fees Act on lets with pets

Almost 12 million households in the UK own a pet so you could question why a landlord would exclude such a large proportion of the population by stipulating ‘no pets’ when they advertise their property for rent.

Traditionally many landlords have recognised how widespread pet ownership is and how tenants with pets can make good long-term tenants. Pets are often welcomed by landlords subject to certain conditions including payment of a higher deposit and an agreement that the tenant would have the carpets professionally cleaned at the end of the tenancy.

The arrival of the Tenant Fees Act on 1st June 2019 is a game-changer and is likely to have a negative effect on tenants with pets. Three parts of the Act that will have an effect on tenancies with pets are:

1. Tenancy Deposits are now capped at 5 weeks rent – landlords can no longer require a tenant pays a tenancy deposit higher than 5 weeks rent.

2. A landlord must not require the tenant enters into a contract for the provision of a service with a third party in connection with a tenancy – landlords can no longer require a tenant to enter into a contract with a vet, pest controller or cleaner.

3. A landlord must not require the tenant enters into a contract for insurance with a third party in connection with a tenancy – landlords can no longer require a tenant to have tenant liability insurance or third party liability insurance for their pet.

Likely Outcome

1. Landlords are less likely to let their property to tenants with pets – the changes the Act brings will be perceived to expose landlords to higher risk and cost so many landlords will simply advertise their properties as ‘no pets’. For those landlords who never welcomed tenants with pets their stance will harden and more than ever these landlords will refuse to consider tenants with pets.

2. Higher rents – of those landlords who welcomed pets in the past many (but not all) will continue to do so ‘subject to negotiation’ and landlords will expect tenants with pets to offer and pay a higher rent to cover three things:

• Treating the property for fleas and other parasites at the end of the tenancy
• Cleaning the flooring and soft furnishings at the end of the tenancy
• Additional rent in lieu of the additional tenancy deposit (pet deposit) previously collected to cover any damage caused by the pet

A few points of note on this:

• 9% of the UK population have a pet allergy. 1 in 4 cats and 1 in 7 dogs are carrying fleas, and about 11 per cent of these fleas are infected with potentially pathogenic bacteria (Bartonella). For the sake of the health of the next occupier of their property landlords can only hope, but cannot require, outgoing tenants will treat the property for fleas and other parasites and clean the flooring and soft furnishings so will need to take responsibility for this. The only way to legally recover the cost of this is to charge tenants with pets a higher rent.

• The cost of the flea treatment and cleaning will reasonably need to be collected during the term certain for the tenancy (fixed term of the tenancy). Under the Act landlords cannot charge a higher rent for a period at the start of the tenancy and reduce the rent for a later period in the tenancy. The larger the property and the shorter the fixed term, the higher the premium will be and with most tenancies continuing beyond the fixed term, tenants with pets will ultimately be paying more in increased rent than the cost of the fees they paid before the Act became law. Good news for landlords, bad news for tenants with pets.

• Landlords will need to ensure, and make it clear, tenants are paying a ‘higher rent’ and not a ‘pet fee’ or ‘pet deposit’ as these fees or deposits are prohibited under the Act.

• Section 13 rent increases during a tenancy for which a tenant is paying a premium rent could prove to be awkward as tenants could challenge the increase on the grounds that the rent is unreasonable and a rent above market value may be considered unreasonable by a tribunal. A possible workaround for landlords is to include a rent review clause in the tenancy agreement. Rent review clauses apply to fixed term tenancies and contractual periodic tenancies only.

Further Reading

1 in 4 cats and 1 in 7 dogs carrying fleas with high levels of bacteria, finds Big Flea Project (Bristol University)