How the Tenant Fees Ban Can Backfire on TenantsMake Text Bigger
CASE STUDY – based on a true story
Lucy, Amy and Charlie rented a property for 12 months on a Joint Tenancy basis just three months ago. However, Lucy has been offered a better job closer to her parents, so naturally she wants to move out.
Amy and Charlie have no objection to this because their friend Sharon is happy to move into Lucy’s room.
They contact their landlords, who in turn contacts their Agents for help and advice.
The Agent advises as follows:-
- Lucy would like her share of the deposit to be refunded and Sharron is happy to pay this. HOWEVER …
- The referencing and Rent Guarantee Insurance “RGI” policy was based on the income from all three of them
- Sharon will need to be referenced
- The RGI policy will need to be amended
- Sharon will need to be served a How to Rent Guide
- The Tenancy Deposit will need to be unprotected and protected again in the names of the new tenants
- A new Deposit Protection Certificate will need to be issued
- You have a choice to issue a new tenancy (if Lucy or any of the other girls serve notice) or as an alternative we can deal with this with a Deed of Assignment if all the girls agree to that
OK, says the landlord, but who is going to pay for all of this?
Well, you will have to pay, says the Agent, because it it now illegal to charge the tenants.
OK, says the landlord, I will not agree to it then. The three of them are jointly liable to pay me the rent for the remaining 9 months of the contract and I am not obliged to agree for Sharon to move in.
How is this fair on any of the girls?
And that, my friends, is why legislation can be so dangerous when the full consequences of it are not thought through properly.
Remind me, who was this Tenant Fees Ban designed to protect again?
However, there was a happy to ending to this particular story.
“If a tenant requests to leave before the end of their tenancy you are entitled to charge an early termination fee. This must not exceed the financial loss that a landlord has suffered in permitting, or reasonable costs that have been incurred by the agent in arranging for, the tenant to leave early.
This usually means that a landlord must not charge any more than the rent they would have received before the tenancy reaches its end.
It is good practice to agree to any reasonable request to terminate the tenancy agreement early. If there are no missed rent payments, we encourage you to not charge any early termination fees unless you can demonstrate through evidence to the tenant that specific costs have been incurred (e.g. marketing and referencing costs). Any payment that exceeds the landlord’s financial loss or an agent’s reasonable costs will be a prohibited payment.”
Thankfully, Lucy only had to pay £100 because that is all LettingSupermarket.com charged the landlord to deal with all the matters described above.
Other Agents may well have charged significantly more for all the work described above, which could result in questions over “reasonableness”. That could open up a huge can of worms, and possibly it would be happy days for the lawyers who fight the case, and maybe for the Agents too if they get paid, but not for Tenants or the Landlords.
When Shelter get their teeth into a case of this nature, and I am sure they will at some point, it will again be landlords and agents who are made out to be the baddies, even if it is the agent who charges what a Judge decides after the event are “unreasonable fees”.
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