Letting agents’ membership body Propertymark is urging agents and landlords to check that the tenant fees they charge do not contravene the law and that any repayable expenses are well documented and evidenced.

This follows a First Tier Tribunal decision that a proportion of the fee charged in relation to a change of tenancy should be repaid. To the tenant
The case, decided in August by Judge Ruth Wayte, involved tenant Stephanie Haynes and Mark Rawlins, trading as Letting 4 Oxford.

Haynes had been charged £170 in respect of early surrender of her tenancy after she had found a replacement tenant to take her place. She claimed the charge was contrary to the Tenant Fees Act 2019, and that the maximum permitted fee was £50.

The judge did not agree that higher ‘reasonable’ fees could not be charged if justified. However, in this case no evidence that the amount charged was justified had been submitted.

It was true the tenancy agreement signed by both parties had stated that the £23.40 cost of referencing and immigration checks in respect of replacement tenants would be charged and that administration costs related to the change would also be charged at £35 per hour.

‘If the respondent can show that their reasonable costs of arranging the sublet were £170, it would be a permitted payment under the 2019 Act’, said the judged. However, that had not been the case.

‘The guidance on the 2019 Act for landlords and agents is clear that if a tenant has found a suitable replacement tenant, it is unlikely that a fee above £50 can be justified and that any costs above that amount should be evidenced.

‘The applicant accepts the cost of the credit checks at £23.40 and I consider that one hour at £35 per hour would be ample to go through the steps set out….

‘A set fee of £50 for re-issuing the contract is not acceptable. In the circumstances I consider that the permitted payment in this case is £58.40 (£23.40 plus £35) including VAT (I note there is no reference on the tenancy agreement to VAT). This means that the respondent must return £111.60 to the applicant’.

Propertymark’s compliance auditor Matt Eades said the case showed how important it is for landlords and their agents to ensure compliance with the Tenant Fees Act 2019 and also highlighted the value of recording any work undertaken so as to ensure fair recompense.

‘Fees are prohibited only if they exceed ‘reasonable costs’, so if work has been done and is well-documented, a tribunal is more likely to find in favour of an agent or landlord.

‘What this decision implies is that there may well be circumstances in which the cap of £50 can be exceeded’.