A loophole in the Tenant Fees Act has been tightly closed after a letting agent was ordered to pay back £343 to a tenant because it could not prove the charge for moving in his replacement was out of the ordinary.

The First Tier Property Tribunal heard that Ludlow Thompson had taken £393 from Mr Brennan, the tenant of a shared house in Leighfield House, Hackney, after he left the property, to provide a new tenancy agreement naming the new tenant.

Mr Brennan claimed it was a prohibited payment under the Act – and the court agreed.

The agent told Mr Brennan that the costs included issuing replacement guidelines to the landlord and tenants, negotiating certain matters with the landlord, collecting rent and the deposit from the new tenant and providing advice and assistance on the return of the tenant’s deposit.

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Run of the mill

The court ruled: “At no point has it made a case for this transaction being anything other than an ordinary, run of the mill example of tenant churn in shared rented housing.”

It said that to exceed the £50 upper limit under the Tenant Fees Act, “a landlord or letting must be able to point to something that makes the charge at least somewhat out of the ordinary run of similar transactions”.

hooker

Sean Hooker, head of redress at the Property Redress Scheme, says the case will set a precedent and help to clarify the situation for redress schemes in future disputes.

He tells LandlordZONE: “How can you demonstrate time and effort if it’s a fairly straightforward change of details? Everything has a cost but how much cost is involved in changing a name on a tenancy agreement and issuing paperwork?”

Read more about the tenant fees ban rules.

5 COMMENTS

  1. If I’ve read this correctly, the outgoing tenant left the property after giving correct notice? – in which case its crazy to try and charge him for the cost of admin for a new tenant.

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    However, if the Tenant wanted to vacate early, the LA (ultimately the LL) will incur costs that would not normally be due until the end of the agreement period ie when the tenant was actually due to vacate.

    LAs (LLs) cannot charge fees in connection with setting-up a new Tenancy so WHY should they agree to let a Tenant leave their contractual obligations early – only the LA / LL lose ££ in such a situation.

    While I don’t think many of the excessive charges some LAs charge are “fair” they do by Law have to display them on their website and in literature etc so there is no excuse for not being aware of them.

    Should the charge have been £343? probably not – but it is certainly higher than the £50 permitted (pre-application admin, holding deposit accounting, referencing, new AST signing, outgoing inventory, incoming inventory, deposit collection, deposit protection, issuing documents and forms etc).

    Personally, I would expect something less than £150 to be charged – BUT REMEMBER – that is only payable when a tenant wants to leave early and not when they end their contracted stay.

  2. Nothing new here a LL is only allowed to pay fees, not charge fees. Now they want LL’s to pay their moving costs, it will be a big collapse with so much added costs, my rent are down costs are up and licensing to be renewed.

  3. Assuming that the tenant was being charged for a replacement tenant as they were in a fixed term tenancy then this judgment certainly does set a precedent- next time the Landlord or agent will just say no it’s not possible and the rent for the whole term remaining will have to be paid.
    Once again a rushed piece of legislation that will ultimately make the situation worse for tenants

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