The Tenant Fees Act 2019 came into force on 01 June 2019. 

In the recent Court of Appeal case of Martyna Switaj v Adrian McClenaghan (2024), the Court of Appeal addressed the status of fees taken in respect of a tenancy before the Act came into force and how this impacted S21 notices. 

In this case, Ms Switaj entered into an assured shorthold tenancy on 12 April 2018, for a term of 12 months. The terms of the tenancy included a number of Initial Fees: 

• A deposit of £1,615.00 
• Rent of £1,400 per month 
• The sum of £120.00 + VAT administration fee 
• An unquantified check out fee 

All of the Initial Fees were paid by Ms Switaj in 2018. 

Two further tenancies were entered into by Ms Switaj between 2018 to 2021: 

1. April 2020 – A new assured shorthold tenancy of an initial 12-month fixed period and thereafter a periodic tenancy. A security deposit was paid but no administration fee or check out fee. 
2. April 2021 – A further assured shorthold tenancy for a further 12-month fixed period on the same terms as the April 2020 tenancy. 

The landlord, Mr McClenaghan, served a section 21 notice on 22 June 2023, which was defended by Ms Switaj. This was defended on the basis that the payment of Initial Fees in 2018 rendered the section 21 notice invalid

In the first instance, Ms Switaj’s argued that the ‘requirement’ to pay the Initial Fees carried over into the subsequent tenancies (relying on the reasoning in a previous case of Superstrike Ltd v Rodrigues (2013)). This argument was rejected on the grounds that the subsequent tenancies did not ‘require’ the payment of the Initial Fees and did not breach the Tenant Fees Act. Ms Switaj’s case was initially dismissed and the matter came before the Court of Appeal. 

The Court of Appeal had to consider the issue of the Initial Fees made before the enactment of the Tenant Fees Act.  There were two integral issues for the Court of Appeal Judge to consider. 

Firstly, was the case of Superstrike Ltd v Rodrigues (2013) distinguishable from the present case? 

The Court noted that any payment ‘required’ under a Tenancy must be ‘overt and active’, silence is not sufficient to amount to a requirement. It was argued by Ms Switaj that, as Mr McClenaghan had not returned the check out fee for any of the subsequent tenancies, this amounted to a payment as a ‘requirement’. The Court of Appeal rejected this argument on the basis that Mr McClenaghan, had not ‘required’ the payments. Ultimately, the check out fee was simply part of the overall consideration for the Tenancy and was required and paid for long before the Tenant Fees Act. Ms Switaj had at no point asked for the repayment of the check out fees. 

Secondly, where the Initial Fees were not returned, could this retention be considered as a payment pursuant to a ‘requirement’ breaching the Tenant Fee Act and preventing the landlord from serving a S21 Notice?

The Court had to consider the basis on which Mr McClenaghan retained the check out fee after the Original Tenancy came to an end and after the Tenant Fees Act came into force. 

Evidently, Ms Switaj had been required to pay the check out fee long before the Tenant Fee Act came into force and had not been required to make this payment again. The fact that Mr McClenaghan did not return the check out fee did not mean that a payment was ‘required’ nor was in consideration of the grant of the tenancy. 

The Tenant Fees Act, particularly, section 1(6) demonstrates a phrasing within a contractual context. In this case, ‘the grant’ was the granting of the original tenancy. Section 17(1) also determines that any ‘requirement’ must cause payment. 

Ultimately, The Court of Appeal dismissed Ms Switaj’s appeal. This gives clarification to landlords in relation to the validity of S.21 Notices. Fees paid by a tenant before the enactment of the Tenant Fees Act 2019 cannot prevent a landlord from recovering possession under S.21 Housing Act 1998 subject to whether these payments are ‘required’.