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Read more articles in: Blog, Dispute Resolution, Mander Hadley

Tenant Fees Act loophole leaves renters with large fees

It has been over a year since the Tenants Fees Act (TFA) was enforced by the Government.

This legislation was to support renters moving out of properties and ban extra charges such as viewing, check-out and inventory fees.

However, a young male, Matt Quinton, soon realised that this was not always the case. He has recently been offered the refund of a large fee considered unreasonable – only if he would sign a non-disclosure agreement.

Mr Quinton’s partner was moving out of a two-bedroom flat in South London that she was previously sharing with a friend. Having only been part-way through her contract, she found someone to ‘novate’ her tenancy to ensure the contract was not being broken.

Despite this, a large bill of £411 arrived from her letting agency, including a charge of £229, before VAT, for the creation of a new tenancy agreement and inspection and deposit registration fees.

The Tenant Fees Act states that fees for a ‘novation’ must be capped at £50 or cover ‘reasonable costs’ but the letting agent argued that £411 was deemed ‘reasonable’.

Previous Government guidance asserts that if the outgoing tenant has found a replacement, it is very unlikely that a landlord or agent can justify a charge over £50. However, with the ambiguous wording of ‘reasonable costs’ included in the legislation, it appears that some are finding a loophole and the door has been left open for firms to make an argument for charging a higher amount.

It appears that since the law changed over a year ago, the Property Ombudsman has registered 207 complaints about ‘unlawful fees’. Not to mention, how many people will have been over-charged without filing any formal complaints.

Suddenly, the letting agent offered a partial refund to Mr Quinton of £229 plus VAT as a goodwill gesture. After he declined this and one more higher offer, Mr Quinton was offered all of the money back – if both him and his partner signed a non-disclosure agreement, agreeing that they would never tell a soul about the deal.

As well as this, they were to inform the Property Ombudsman that they had resolved their complaint amicably and ask them to close the file.

It is extremely hard to assert whether this letting agent was breaking any rules by doing this and there is now a three-month wait for the Ombudsman’s decision on this intricate matter.

Property-related disputes like this can arise for any number of reasons, particularly where there is much ambiguity in Government legislation. These can often be avoided if advised on professionally and sensitively.

For more help or advice on how Mander Hadley can assist you with your property dispute, please get in touch today.

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