Tribunal hands down important decision on Tenant Fees Act
It has been decided by a First Tier Tribunal that a person leaving a shared property after a fixed-term tenancy ends cannot be charged to reference new tenants if one of the existing tenants decides to stay.
A property tribunal has issued an important decision about the Tenant Fees Act after a letting agency refused to return a fee it had charged a group of renters to reference new applicants after their tenancy ended.
Just one of the four tenants challenged the £21.60p he was charged but the agent involved, London firm Blakestanley said the fee was allowed under the Tenant Fees Act 2019 despite tenant Sheldon Kaplan pointing out that he believed it was not from the outset.
Kaplan had rented the property on Daubeney Road (main picture) in Hackney with three other people for a fixed-term of 12 months which ended in October last year; they had all given notice.
Unfortunately for the agency, one of them was a property lawyer specialising in tenant and landlord law.”
But one of the tenants, Dugald Johnson, said he wished to stay and found three new people to move in, requesting a fresh tenancy. Unfortunately for the agency, one of them was a property lawyer specialising in tenant and landlord law, who pointed out to the firm that he believed the referencing fee was a prohibited payment under the Act.
But Blakestanley disagreed, telling both former and new tenants that it considered the situation to be a ‘change of occupancy’ rather than a new tenancy and that therefore the fee was reasonable in order to pay for the cost of referencing the new tenants. Kaplan then took the firm to a First Tier Property Tribunal and won his case and must be refunded the £21.60p fee.
Fixed term
The crux of the case is whether a tenant leaving a property following the end of a fixed-term AST can be charged a fee like this even if one or more of the ‘jointly and severally liable’ tenants decides to stay and begin a new rental contract. The Tribunal decision is that those leaving the property are not liable for the costs of referencing.
Those leaving the property are not liable for the costs of referencing.”
This kind of ‘grey area’ is a nightmare for letting agents – Blake Stanley told the tenants involved that its legal team had looked at the official guidance on the Tenant Fees Act and believed it was right to claim that “all existing tenants remain joint and severally liable for the rent and the terms of the contract until the whole process has been carried out and a new tenancy is signed”. The Tribunal disagreed.
You’d have thought the agent would have known this basic bit of law; however more to the point, this highlights just how petty many tenants have become, wasting all this time of everyone’s life over £20; principle or no principle, you’d think time was worth more than £20 to both parties.