Letting Agent Deducting Commission from Deposit Refund

by Readers Question

14:21 PM, 21st May 2014
About 4 years ago

Letting Agent Deducting Commission from Deposit Refund

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Letting Agent Deducting Commission from Deposit Refund

Hi Readers,

My previous tenant vacated the property leaving £787 in rent arrears. The secure deposit which the letting agent lodged in their own name is for £625. The agent has identified £193 worth of repairs that need carrying out as a result of damage by the tenant.

Whilst the tenant has agreed to the £625 deposit being used to reduce the arrears, they have not as yet agreed to the £193 repair costs.

The letting agent has informed me that they can only refund £432 (625-193) as they have to retain the repair costs. I would have been happier to receive all the deposit back, especially as the tenant has already agreed to this and then carry out the repairs myself.

Now the agent is saying they will be deducting their 10% commission from the £432 refunded. Surely as the commission is payable on rent collected this should not be the case. On 2 previous occasions were I have had tenants leave in arrears the letting agents on those occasions returned the value of the arrears from the deposit in full without deducting commission.

Does anyone know the legality of this?

Thanks
Bobcommission



Comments

Alan Loughlin

15:11 PM, 21st May 2014
About 4 years ago

which is why we now do not take deposits, when we did tenants just did not pay the last months rent and then we were left to clean up at our cost, now we take the final cleaning cost and an amount which averages putting things right as an upfront fee. that way there is no arguments over deposits and cleaning.

Simon Topple

15:35 PM, 21st May 2014
About 4 years ago

What to the T&Cs say? It is perfectly reasonable in my view to deduct commission from rent collected. The agent has had to do additional work to get the money back via the DPS. This comes at a cost. During the period the rent covers, the agent was also managing the property. Granted, they may have failed to get the rent in for that month, but they were presumably still managing the property and arranging repairs etc.

Regarding the repairs - is the agent out of pocket on these? Did they arrange works on the property? Did they get prior approval of works?

Chris Amis

15:38 PM, 21st May 2014
About 4 years ago

I am surprised they did not take £62.50.

Romain Garcin

15:51 PM, 21st May 2014
About 4 years ago

The only question is what Bob's contract with his agent says about payment of commission. It probably says that it is due on rent collected.

I think that because the £432 are effectively rent (since it is to cover the tenant's arrear) then the agent is entitled to his commission (at least he thinks he is) on it in the say way he would have been if the tenant had paid his rent on time.
Assuming commission is due on rent collected, I guess it depends on how you interpret 'collected'.

Regarding the cost of repairs, as the agent is presumably holding the deposit as stakeholder he cannot give the money to Bob until the tenant agrees or an adjudicator/court decides so.
The agent is therefore continuing to hold that part of the deposit until its allocation is decided.

Lee Alderson

15:52 PM, 21st May 2014
About 4 years ago

I agree especially with all the bad press regarding estate agents clearing off with tenants deposits and now trying to tax the deposits any way they can. There should be a website to name and shame the estate agents who try to rip off landlords.

I have a tenant moving in at the end of this month and usually use TDS for the deposit but I have now decided to save my money and the hassle and not take a deposit. I have found that the rental market is a completely different business to what is was 5 or 6 years ago. The credit checks and demand for rental property has now changed and so the type of tenants who apply for my properties have also.

Most are scared to make any problems during their tenancy as they know its very difficult to find new available properties and especially with a bad landlords reference. The other thing that's changed is the length of tenants stay. Most likely because of what I have just mentioned. If you look after them then 99% of the time they return the goodwill.

I'm going to give it a couple of years without taking deposits and see how it goes and if I can up the rent slightly for advertised properties because of the tenant not having to find 2 months up front it may just make the difference.

Alan Loughlin

15:56 PM, 21st May 2014
About 4 years ago

that is exactly what we do, we charge top end rent which puts off the dross, and advertise with no deposit, just a one off fee, we have ours cleaned and decorated from this money, and it is in the bank up front, no hassle from deposit schemes, no risk of falling foul of the stupidly complicated rules

Don Holmes

15:59 PM, 21st May 2014
About 4 years ago

Hi Bob
I run an Agency group so will try to respond impartially.
In the first place the Agent acts for the Landlord and even though the deposit account might be in the agents name the deposit is held in "favor of" the LL

If the tenant has agreed to the deposit being used to cover part of the outstanding rent then there should be no further issue, In relation to keeping back £193 or any amount for work which you the owner has not either requested or authorised is simply nonsense.
It seems to me Bob that this might be a case of the "tail wagging the dog" issue some direct instructions and be prepped to back them up, such as complaining to any official body the agent might belong to, or indeed instruct legal proceedings. Generally the threat of such action should have the desired effect. Once you are satisfied then please make an official complaint to the trade body if they are associated with one, because we need to weed these people out of our industry!

All BankersAreBarstewards Smith

16:05 PM, 21st May 2014
About 4 years ago

Reply to the comment left by "Alan Loughlin" at "21/05/2014 - 15:56":

Alan how do you describes the upfront fee so that it is not seen as a deposit ?

Alan Loughlin

16:09 PM, 21st May 2014
About 4 years ago

just call it a contract fee, and make sure there are zero´s in the box for deposit taken.

All BankersAreBarstewards Smith

16:11 PM, 21st May 2014
About 4 years ago

thanks very much

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