Letting Agent’s Fees:

In view of the government’s ongoing consultation on letting agents fees for tenant’s, with a view to banning these, this is perhaps a timely reminder for both landlords and agents of the legal position with landlord / agent contracts and when agent’s charge fees, both to landlords and to tenants.

In her latest newsletter, Tessa Shepperson of Landlord Law puts out some interesting legal facts about the relationship between landlords and letting agents and how and when they can charge fees.

Here Tessa lists six interesting facts about letting agent fee s

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There is a lot of discussion about letting agent fees just now, particularly with the government consultation on agents’ fees to tenants.

Here are a few interesting legal facts you may not be aware of:

1 – Fees not authorised by the agency agreement

Under agency law, an agent is only allowed to charge fees which are authorised in the letting agreement or which have been specifically agreed to by the landlord. So if a letting agent charges fees to tenants which their landlord client is unaware of, this will be in breach of their agency agreement.

Strictly speaking, the money does not belong to them but to the landlord!

2 – Unfair terms

Agency agreements are (unless they are with ‘professional’ landlords with large portfolios) subject to the unfair terms rules (now part of the Consumer Rights Act 2015).

So any fees and/or commission charged must be clearly set out and drawn to the landlord’s attention before they sign. If they are buried in the small print the clause will probably be unenforceable, particularly if it is for something landlords would not normally expect (as per the 2010 case brought by the Office of Fair Trading against Foxtons).

3 – Requirement to publish fees

Letting agents must publish full details of all their fees on their website and in their office. The fees must be very clear and say exactly what the charge is for, and whether it is charged per tenant or per property.

If this is not done, then the agent is vulnerable to a penalty charge issued by the Local Authority Trading Standards Office.

4 – Fees to be VAT inclusive

It will be considered ‘unfair’ if agents publish their fees ex VAT. All quoted fees should be inclusive of VAT or they will be misleading.

5 – Failure to notify cancellation rights

If a landlord’s agreement with the agent is made either wholly or partly off the agent’s premises (which will usually be the case as the agent will normally visit the property), then the landlord has a right to cancel and must be notified of this by the agent – otherwise the cancellation period of 14 days will be extended until they do. This can result in fees being unenforceable.

6 – Property Redress Scheme

If a landlord or a tenant considers that they have been unfairly treated by an agent or have been charged a fee which the agent was not entitled to charge, they can put in a complaint to the agents Property Redress Scheme.

The Scheme’s Ombudsman is authorised to make awards (in suitable cases) of up to £25,000.

Were you aware of these facts?

NB – if you are an agent, you may want to check your procedures. If you are a landlord – you may want to question some charges?

Author, Tessa Shepperson of Landlord Law

Consultation on Letting Fees

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