ARLA – Do not charge tenants for arranging repairs

by Property 118

9:21 AM, 10th September 2019
About 3 months ago

ARLA – Do not charge tenants for arranging repairs

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ARLA – Do not charge tenants for arranging repairs

ARLA Propertymark has sought Counsel’s Opinion from housing barrister Erol Topal to clarify for it’s agent members if the tenant fees ban allows for a charge or commission to be made for arranging repair works. This has been a common and frequently asked question by agents since the legislation came into force on the 1st June 2019.

Official government guidance for tenant fees ban released

ARLA have released their summarised guidance with an example question:

Q. If a tenant causes damage such as blocking the toilet with nappies and the landlord instructs the agent to arrange the repairs, can the landlord pass on the agents’ commission as well as the actual costs of the repair to the tenants?

A. Opinion is that this would be against the spirit of the legislation and would only be possible if there were a clause in the agreement making it clear to the tenant. However, such a clause may be subject to challenge under consumer protection law and if deemed an unfair term, the agent could be liable for a penalty.

The conclusion is that the agent’s cost of arranging repairs is not recoverable from the tenant.

ARLA has confirmed it will not be changing its own standard contracts and advises it’s agents  that commission or charges on repairs should not be passed on to tenants.

Click here to download the full legal guidance.



Comments

Michael Barnes

10:28 AM, 10th September 2019
About 3 months ago

I don't read the TFA that way at all.

Schedule 1 paragraph 5 TFA states "A payment of damages for breach of a tenancy agreement or an agreement between a letting agent and a relevant person is a permitted payment."

That to me says "If T breaches TA and LL incurs costs as a result, then LL can lawfully recover hose costs from the T".
The agents costs charged to the LL is clearly a cost incurred as result of T's breach.

The spirit of the legislation is immaterial; the wording of the legislation says it it allowed.

Clint

11:49 AM, 10th September 2019
About 3 months ago

If there was a clause in the Tenancy agreement stating that it is the tenant's responsibility to clear blocked toilets, sinks, drains, etc. after say one month (to ensure there was no blockage in the first place) into the tenancy, surely this should be ok as the Landlord would not be charging the tenant in anyway and the tenant would be paying a contractor for works the tenant is responsible for.

Any thoughts on this? Seems ok to me.

Yvette Newbury

12:22 PM, 10th September 2019
About 3 months ago

I agree with Clint - possibly more problematic for an agency as they are the piggy in the middle of the transaction and would want to be paid as such? Maybe that's the crux of the matter - the agency should be charging the landlord enough so that they no longer need to make these additional charges. Either way it would seem for those using an agent the cost will be passed to the landlord.

Michael Barnes

19:15 PM, 10th September 2019
About 3 months ago

Reply to the comment left by Clint at 10/09/2019 - 11:49If you mean "for any blockages reported in the first month the LL is responsible for meeting the costs of clearing the blockage; thereafter the tenant is responsible for clearing the blockage or the costs of having the blockage cleared by a third party", then you may be OK.

You might need to qualify it by saying blockages caused by putting anything other than water or water soluble substances down sinks ad basins and by putting anything other than bodily wastes and toilet paper down toilets.

Yvette Newbury

19:25 PM, 10th September 2019
About 3 months ago

Reply to the comment left by Michael Barnes at 10/09/2019 - 19:15
I can see a problem with the qualifying statement as that could then cause an argument if the tenant states they did not put something water soluble down sink/basin/toilet. Many products that state they can be disposed of in the toilet eg. "flushable wipes" are NOT in fact appropriate to flush!

Michael Barnes

22:31 PM, 10th September 2019
About 3 months ago

Reply to the comment left by Yvette Newbury at 10/09/2019 - 19:25" Many products that state they can be disposed of in the toilet eg. "flushable wipes" are NOT in fact appropriate to flush!"
And they are neither bodily wastes nor toilet paper.
" if the tenant states they did not put something water soluble down sink/basin/toilet"
Water soluble things are not a problem.
It is fat (which solidifies) down sinks and tampons, wet wipes, etc down toilets that are problems.
And, of course, hair in bath and shower drains.

Rob Crawford

11:32 AM, 11th September 2019
About 3 months ago

ARLA having sought legal counsel means that they have an opinion of a legal advisor. You can go to a number of advisors and get a different opinion. It should be "informed" advice. But that is all it is, it's not a judgement made in a court of law that can then be used as a precedent. In fact one of the reasons matters go to court is because legal advisors will differ in opinion. Until challenged in a court by a tenant who wins, I agree with Michael Barnes first response on this matter. I would not expect my agent to simply pass the commissions etc. onto myself even if they are ARLA members! I think the ARLA advice to agents is somewhat lacking and possibly irresponsible!

Michael Barnes

16:07 PM, 11th September 2019
About 3 months ago

I have now read the linked opinion, and it is not quite as stated in the article above.

Counsel started by assuming that "fully managed" meant all agents fees, including managing repairs, was included.

Counsel also seemed to think that in some way the LL would receive separate bills from the agent and from the repairer.

When it was subsequently pointed out that "fully managed" charges cover only the foreseeable activities, counsel wrote an addendum suggesting that such fees might be recoverable from the tenant.

His conclusions were:
* he cannot make a definitive statement.
* charges by a letting agent to manage the work may be problematic under TFA; charges for a builder to manage the work would be OK (*1).
* If the agent were instructed to carry out the repair (rather than to manage the repair), then the charge would likely be allowed.
* if there is no apparent need for LL to engage an agent, then a court would probably disallow it (e.g. a self-managing LL).
* The penalties for getting it wrong are high against the low value of the charge, and therefore he would advise against doing it.

(*1) I think he was overwhelmed by the "agents cannot charge tenants" part of the Act and failed to see that the agent is charging the LL and recovering the LL's costs from the T under the allowed "damages for breach" provision.

This opinion is from the point of view "should agents do it", and counsel is obviously looking to protect his client's interests and so is being cautious.

I have no doubt that should an agent go to the same counsel saying "I am being sued because I did this", he would provide robust arguments as to why the agent had done nothing wrong.

In summary, his opinion was (my words) I don't know, but you are best avoiding being a test case

I would suggest that anyone who has an interest in this point of law reads the opinion linked from the aricle.


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