Letting Agents – can your tenant reclaim their fees?
We recently blogged about the Scottish Government’s current consultation on letting agents charging premiums and possible amendments to the definition of a premium. Since then, Shelter launched a campaign encouraging tenants to “reclaim your fees”. Shelter wants the Scottish Government to clarify the legislation to make it clear to tenants, landlords and agents just what charges are permitted, if any, over and above rent and a security deposit.
So what is a premium?
The Rent (Scotland) Act 1984 stipulates that a landlord or agent cannot charge or receive any premium (over and above rent and a security deposit of no more than two months rent) as a condition of the grant, renewal or continuance of a tenancy. Many fees currently charged to tenants such as “holding deposits”, “referencing fees” and “administration fees” (to name but a few!) may fall under the definition of being an unlawful premium under the Act. Although it could be said that it is industry standard to charge such fees, many could still be considered to be unlawful premiums. Just because tenants pay them (because they are used to doing so) may not make such fees lawful. Within 24 hours of the launch of Shelter’s campaign, it was reported that 73 people had started the process in reclaiming over £11,400 in such unlawful fees from agents.
What if a tenant contacts me to reclaim fees?
If you are an agent or landlord who charges any of these fees, you should be prepared for current (and previous) tenants to contact you to reclaim these fees. We are aware that a number of agents have been approached already. Some tenants have raised court actions to recover these sums and it is a matter for a Sheriff at court to determine whether the charges are lawful. If he decides in favour of the tenant, the landlord or agent may find themselves having to pay back not only the charge but also the expenses of the court action.
The Scottish Government’s consultation closed on Monday, 28 May 2012. It is anticipated that any changes to the law governing premiums will be brought in the autumn of 2012.
If you are a landlord or agent who is facing a claim by a current or former tenant for repayment of these charges and are unsure how to deal with this claim, please do not hesitate to contact our LetLaw team for further advice.