Agents have been given a sharp reminder to play fair when returning deposits after a First Tier Property Tribunal handed down a ruling on the Tenant Fees Act.
It ordered Ludlow Thompson to pay back £343 to Mr Brennan, the tenant of a shared house in Leighfield House, Hackney, after he left the property and was billed to provide a new tenancy agreement naming the replacement tenant.
Mr Brennan claimed it was a prohibited payment under the Act – and the court agreed.
Ludlow Thompson broke down the costs as: referencing the new tenant – £23.94; inspection – £58.80; creating new tenancy agreement – £274.80; and re-registration of deposits – £36.
In an itemised list of tasks, it included: issuing replacement guidelines to the landlord and tenants, negotiating certain matters with the landlord, collecting rent and the deposit from the new tenant and providing advice and assistance on the return of the tenant’s deposit.
The tribunal ruled that while the Act sets a clear limit of £50, to exceed this, there must be a good reason: “This need not be something truly exceptional, but the landlord or letting agent must be able to point to something that makes the charge at least somewhat out of the ordinary run of similar transactions.”
It added: “In a perfectly normal case of the replacement of a tenant in a shared property, the respondent is seeking to charge nearly 800% of the determinate statutory limit, and in doing so is seeking to charge a departing tenant for what should be considered the routine tasks of a managing agent.”
Maxine Fothergill (pictured), ARLA Propertymark president, says the case illustrates the need for all agents to be aware of the Act.
She tells The Negotiator: “Fees for a change of tenancy are capped at £50, any fee over and above would need very special circumstances, if and only if, there is a very strong supporting case with concrete evidence it is possible to charge more. However, this would be very difficult to prove as the legislation is robust.”
Propertymark adds that it expects all members, of which Ludlow Thompson is one, to operate to the highest of professional standards and says action will be taken against anyone in contravention of its rules.
Read more about the Tenant Fees Act.