Letting Agents – can a tenant reclaim fees?

Letting Agents - can your tenant reclaim fees?

We 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 if you are letting agents – can a tenant reclaim fees?

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.

can a tenant reclaim fees

5 responses to “Letting Agents – can a tenant reclaim fees?”

  1. Fiona says:

    The definition of a “premium” under the Rent (Scotland) Act 1984 includes any fine or other like sum and any other pecuniary consideration in addition to rent. However, this is in connection with the grant, renewal or continuance of the tenancy. Where you have provision in your lease for a fine being levied, or interest charged on late rent, this doesn’t necessarily fall within the 1984 Act definition of a “premium” as such. However, if deemed to be unreasonably high, it could still be deemed to be an unfair contract term. Therefore if any late payment fines or interest on late rent is being provided for in a lease, this should be a reasonable amount and justifiable under the circumstances, otherwise it could be struck out by a court as being unfair.

  2. Stuart McDonald says:

    Dear Sir / Madam

    Can you please advise … as a landlord, can my agent lawfully charge me a 6 monthly fee for my tenant renewing their lease ?


  3. Ruth says:

    Hi Stuart – the answer will very much depend on the circumstances of the case and as such it’s difficult to give a response to your query without further information. A member of the Letlaw team would be happy to chat if you want to get in touch.

  4. Angie Harmel says:

    Can you tell me what the latest legislation is regarding the term ‘premiums’ and what exactly is included? The information on-line seems dated. I have tried reclaiming my fees using Shelter Scotland’s on-line toolkit, and the response from my agent was that they ‘didn’t agree the fee paid was a premium’ and that there will be an amendment to the definition of ‘premium’ by the Scottish Government.

    Thank you

  5. Chris says:

    Angie, this probably won’t help as it’s been quite a while since your comment but you should take the case to a small claims court if you have already written to them twice. They try to discourage you from reclaiming your fees because it is not in their interests to paying them back to you, so they do not tend to acknowledge the claim is justified until they’ve been forced by the small claims court. If you’re worried about the fees from the small claims court, remember that you will get the costs back with the reclaimed money.