Agency and landlord win battle over ‘fair fees’ after tenants break contract
Tribunal judge deems charges for 'lost rent' and new tenancy set-up fees of over £2,000 to be reasonable.
A landlord and their letting agency have won a tribunal battle over what constitutes ‘fair charges’ under the Tenants Fees Act when tenants decided to break their rental contract early.
The case was triggered when two tenants renting a house in Twickenham, London (pictured) questioned the £2,270 they were charged by their landlord Anthony Hogg and local agent Chase Buchanan.
This followed the tenants’ decision to break their tenancy contract after a few months of moving into the £1,950-a-month property.
The charges included ‘lost rent’ – the property was subsequently rented for less – at £1,500 spread over ten months plus the agent’s fee of £420 for setting up a new tenancy, all of which Judge Edgington said were ‘reasonable’.
Check out fee
But he disallowed the combined check-in and check-out fees of £290, saying a single payment of £145 was allowable because the two events should have happened at the same time.
“I consider that the monies obtained from the Applicants come within the definition of ‘permitted payments’ if they are reasonable,” he said.
“The rent claimed is reasonable. If the landlord or his letting agent had been able to get more rent for the property, then I am sure that they would have done so.
“With regard to the fees claimed, as with any First-tier Tribunal member in the Property Chamber, I have much experience over many years of assessing whether estate agents’ fees or letting agents’ fees are reasonable.
“In this case, the fees claimed are, in my view, reasonable except for the fees claimed for check-out and check-in.”
Pic credit: Google Streetview
For reference I am not a lawyer but have been in lettings and management since 1972 so have a fair background. In addition I have been a landlord for 20+ years.
Seems very fair to me.
I assume that the judge applies the same standards to leases as to other contracts i.e. that the aggrieved party is put back into the same position they would have been if the contract/lease had been completed in accordance with all the terms.
In this case the tenant failed to rent for the full term of the lease and the landlord (and by extension his agent) has the right to claim for expenses which would not otherwise have been incurred.
In this case the property was re-let at a lower rent (wouldn’t happen at the moment in my area) and there were other incidental expenses which would not have been incurred such as early checkout and agents fees on re-letting.
To answer your specific question it depends on the agent’s contract but in most the set up fees (such as referencing, inventory, check-in etc) are due on letting are paid out of the first month’s rent and the management fees are paid monthly. If you chose to do a let only then the fee for finding the tenant would be paid up front as well. The agent has earned the fee for finding the tenant and has to go through all the same processes to find the next tenant, albeit at a lower rent with a lower fee in this case.
The check-in/check-out fee is also fair – the check-out fee was required because the tenant left but the check-in for the new tenant would have been charged in any event.
I recently had this position but partially in reverse. A tenant disappeared without warning (gone into police protection we are told!) and I was able to re-let at a higher rent for the remainder of the term of approx. 6 months. When calculating how much of the deposit we ciould use to defray our additional costs we added back in the increase in rent (less the extra letting fee) so in the end he got about 50% back.
What is the situation where a landlord has paid an agents fees to do the original letting and then the agent has to arrange another letting?