£50 or the reasonable costs?

£50 or the reasonable costs?

11:00 AM, 1st October 2021, About 2 months ago 9

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A recent Tribunal between estate agent Ludlow Thompson v Tenant has ruled that a charge of £393.54 to cover costs of changing the tenant was unreasonable. According to the Tenant Fees Act 2019 (TFA) a fee can be charged where a tenant wants to leave early and replace themselves with an alternative tenant. However, the fee chargeable is limited to be either £50 or “the reasonable costs of the person to whom the payment is to be made in respect of the variation, assignment or novation of the tenancy”.

David Smith, Partner at JMW Solicitors, says: “This will be a problem for many agents who charge their actual costs for these changes, which are usually over £50. The other problem will be for tenants. There is no obligation on a landlord to agree to a change of tenants and if agents are going to be limited to a fee of £50 they may look to recover the additional expense from landlords who may then simply refuse to agree to a change of tenants.

“I doubt that Ludlows will appeal, but I think they should. The Tribunal seems to me to be completely off base on this decision. This case will undoubtedly cause difficulties for agents until it is appealed to the Upper Tribunal and a binding decision is obtained.”



Comments

by DSR

11:46 AM, 1st October 2021, About 2 months ago

Sounds to me as a result of this judgement, there is going to to be a case very soon whereby the tenant takes a Landlord to court for refusing to accept a change of tenant then. So be it - this will then show up quite simply how the law is an ass, and that until it is amended the LL can stick to the law himself that says he is under no obligation to agree to any change as it is 'unreasonable' for him to do so. If he can show that he is not making on this and the fee is therefore reasonable (at whatever cost over £50), he is then in total compliance with the TFA. The tenant is free at any time to challenge the law makers.

by Ian Narbeth

12:41 PM, 1st October 2021, About 2 months ago

As the saying goes: Be careful what you wish for.

Shelter, Generation Rent et al got the Tenant Fees Act, one of the most draconian
laws on the statute book.
It discourages landlords from reaching sensible deals and incentivises tenants to challenge even modest charges. Why should a landlord risk it?
The report does not add, as it might, that if the agent or landlord took the money he was guilty of taking a "prohibited payment" and liable for aa penalty of up to £5000 for a first "offence".

by David

14:14 PM, 1st October 2021, About 2 months ago

I would have thought that TFA19 Sched 1 clause 7(1) and (2) could have been applied with a slightly different billing arrangement.

by Ian Narbeth

14:53 PM, 1st October 2021, About 2 months ago

Reply to the comment left by David at 01/10/2021 - 14:14"I would have thought that TFA19 Sched 1 clause 7(1) and (2) could have been applied with a slightly different billing arrangement."
Please expand on that. A problem for agents and most landlords is that the TFA is complex. The agent is not going to take legal advice about whether it is lawful to charge a few hundred pounds.
Whilst I agree with David Smith that the decision is off base, that is on the basis of Lord Denning's view that the law is there to do justice. I think the decision is wholly in line with the Act. The MPs who voted for it did not understand it. It is crazy that the law interferes with a freely negotiated bargain. After all the tenant could have continued to pay hundreds or thousands of pounds in rent and saved £393.54. Nobody forced the tenant to surrender the tenancy.
I fear the situation will get worse. If the only certainty is that a fee of £50 is acceptable then agents and landlords will know that any sum in excess of that is open to challenge. It is a one way bet for the tenant. He/she may agree the figure, get out of the tenancy and then turn round and ask for the excess over £50 to be repaid. Unless the tribunal accepts the full figure, the landlord/agent has taken a prohibited payment. Once tenants latch onto this the opening gambit will be: "you know unless the tribunal awards you every penny, you are potentially liable to a financial penalty. As Dirty Harry might say: "Do you feel lucky, punk?""

by DSR

16:06 PM, 1st October 2021, About 2 months ago

slightly off kilter here but a similar vein?

What happens when joint tenants on a TA split and the tenant left wants to make an amendment to remove the other person of the TA? Does the request have to come for the tenant who is left or the one who leaves? A charge of £50 can be levied if the LL accepts but who pays this the outgoing or current stayer? What happens if neither wants to pay? The LL is not obliged to change the TA is he?

by Ian Narbeth

16:33 PM, 1st October 2021, About 2 months ago

Reply to the comment left by DSR at 01/10/2021 - 16:06
Why would a landlord let go of the departing tenant. He or she will remain liable.

by David

17:53 PM, 1st October 2021, About 2 months ago

Reply to the comment left by Ian Narbeth at 01/10/2021 - 14:53
Whilst the wording of the Tenant Fees Act only allows agents to charge a reasonable fee if the tenant is paying them directly, the landlord is free to charge their full costs under clause 7. If the agent bills the landlord for the full costs, the landlord should be able to recover them from the tenant as a permitted fee. Not saying the agents costs shouldn't be reasonable though and I do accept that it can be messy sorting out what is a genuinely additional cost and what is simply an existing commitment brought forward.

by DSR

9:50 AM, 4th October 2021, About 2 months ago

Reply to the comment left by Ian Narbeth at 01/10/2021 - 16:33
the couple split but both were on the TA. I believe she claimed the housing element in her name (and I've just had a direct payment agreed by UC) and the deposit paid by the Council was in her name too. I can't see how removing his name or leaving it on there is an issue as there would be no point chasing him for rent arrears/damage etc.
Am I missing something here?

by Ian Narbeth

10:02 AM, 4th October 2021, About 2 months ago

Reply to the comment left by DSR at 04/10/2021 - 09:50
It may be your judgment that he is not worth pursuing but there is nothing to be gained by formally releasing him from the TA. To do it properly requires a binding deed of release. Why waste time doing this? It is always open to the landlord not to pursue him.


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