Fears letting agencies are breaching the tenant fees ban with charges and excessive deposits
Exclusive figures obtained by i show 18 cases being investigated which could total £45,000 worth of financial penalties to agents
Georgie Laming (R) and Sorana Vieru (L) were recently charged a checkout fee by their agency Winkworth at the end of their tenancy
In June 2019 the Tenant Fees Act became law in England. In September, the ban came into force in Wales. Letting fees had been banned since 1984 in Scotland so this was a landmark piece of legislation intended to redress the power imbalance between renters and their landlords and letting agents in England and Wales.
Before the act came into force, average fees for actions such as changing a name on a contract or checking out at the end of a tenancy were coming in at more than £200 and being recorded as high as £700. Housing charity Shelter found these fees were actually a barrier to low-income households being able to access rented accommodation.
The Tenant Fees Act implemented a ban on all of the upfront fees charged by letting agents, ranging from so-called ‘administrative fees’ and ‘credit check fees’ to ‘tenancy renewal fees’ or mysteriously expensive ‘referencing costs’. It also introduced a cap on deposits, stating that landlords and letting agents will only be allowed to charge a maximum of five weeks’ rent for security deposits, and one week’s rent for holding deposits.
Under the new legislation, the only fees renters can be charged are: their rent, a refundable security deposit, a refundable holding deposit, a charge for the change or early termination of a tenancy when requested by the tenant (within reason), payments arising from a default by the tenant where they have had to replace keys or a respective security device, or a charge for late rent payment (not exceeding three per cent above the bank of England base rate).
Local authorities are responsible for enforcing the Tenant Fees Act. However, i can reveal some agencies are allegedly breaching the ban on fees. This has resulted in multiple authorities opening investigations. They are: Camden, Westminster, Hammersmith and Fulham, Tower Hamlets, Stoke on Trent and Leicestershire.
A spokesperson for Tower Hamlets Council told i enforcement isn’t always easy. “The nature of the legislation means that proving a breach has occurred is a lengthy and involved process,” they said.
“To date we have served three notices of intent for breaches relating to taking excessive deposits, taking multiple deposits for the same property and failing to return a deposit within an acceptable time frame.”
The National Trading Standards Estate and Letting Agency Team told i it is aware of 18 cases which could total £45,000 of financial penalties if the agents are found to have breached the legislation. Agencies who breach the fees ban have committed a civil offence which carries a penalty of up to £5,000.
Georgie Laming and Sorana Vieru were recently charged a checkout fee by their agency Winkworth at the end of their tenancy. Under the Tenant Fees Act, this is not permitted.
"The estate agent tried to charge us a £170 checkout fee for a company to do an inventory upon vacating the property, despite us having renewed our contract after 1 June 2019, when the fee ban came into force, which meant some fees listed in our original agreement could no longer apply,” says Sorana.
“I replied politely explaining that the Act treats renewed agreements as new contracts, and sent through links to guidance and references to the relevant bits of the law. But they continued to insist that we pay.”
Each time she queried their rationale, Sorana says Winkworth “came back with a new reason for charging the fee”.
“They quibbled over the meaning of the word ‘fee’, [from] insisting it was an ‘invoice’, to saying the law doesn’t apply to renewed contracts and we were bound by the terms of our previous agreement. Lastly, they claimed that we had to renew for a second time for the ban to apply. At times it was verging on hilarity, and I would have laughed if it wasn’t so serious.”
Both Georgie and Sorana say the situation left them feeling “frustrated”. “We felt like they were trying to wear us down at every stage,” Georgie adds.
Things escalated. “They also threatened to take the fee out of our deposit if we didn’t pay,” Sorana says. This is also prohibited by the Act.
“On one occasion, they asked to move the discussion to over the phone and have me talk to their Director to have him explain the situation, which sounded quite intimidating to me,” she adds.
“I stuck to my guns and insisted on communicating by email, knowing I might need evidence in the future if I had to complain to a redress scheme. I wrote a complaint letter to the Director and reported them to the Trading Standards Agency. In the end, the agency’s Director replied, backing down and blaming ARLA [the Association of Residential Letting Agents] for advice they received.”
A spokesperson for the Winkworth office in Harringay said: "The check-out fee has to be paid to the inventory clerk for providing the check-out service for the landlord and tenant. In this case, under new legislation, it was for the landlord to pay and not the tenant because there had been a renewal of the tenancy. We are sorry for any confusion caused to the tenants."
Trading Standards told i it is concerned that despite the new legislation, a power imbalance remains between tenants, landlords and letting agencies. Georgia and Sorana knew their rights, but not everyone reliant on the private rented sector - which is now home to millions of households - will be in a position to argue their case.
“There is a concern that tenants might be reluctant to complain as they are scared of retaliatory evictions,” a spokesperson said. “The Tenant Fees Act does not allow a Section 21 eviction while prohibited fees are still owed, however it could be easy for an agent to refund the fees and evict really quickly.”
This Government has promised to ban Section 21 evictions - also known as “no fault” evictions - which allow landlords to evict their tenants without having to give a reason. However, no date has been put on the ban.
Like Georgie and Sorana, Alan Carson recently experienced an alleged Tenant Fees Act breach. In September 2019, Alan and his flatmates renewed their contract with a branch of the Leaders letting agency in south London. This meant that the existing deposit of 6.5 week’s rent they had paid prior to the implementation of the five week cap needed to be partially refunded to them.
“It took the agents more than four months to return the money to us,” Alan tells i. “We were owed 1.5 weeks’ rent. The agents ignored our emails for months leading up to Christmas and, in January this year, we found out they hadn’t even got the landlord to re-sign the contract.”
Alan has now finally received the money owed. He says he feels telling his story is “a matter of principle, because not everyone will feel they can persevere, argue and negotiate”.
Michael Cook, National Lettings Managing Director for Leaders said: “We are sorry that on this occasion the tenant had to wait an extended period for part of their deposit to be released, which was outside of our normal turnaround time. We have identified the issue in this particular scenario and are confident it has been resolved.”
A number of tenants have contacted i about potentially unlawful fees since the Tenant Fees Act was introduced. These tenants have been in touch to say that agencies have tried to charge them fees, claiming to have made a mistake when the tenant queries them and cites the ban. In such instances, it would be near-impossible to prove an agency was trying to flout the ban.
Shelter told i it is regularly receiving similar queries about fees via their support services.
Since 11 November 2019, the housing charity’s free webchat service has had a total of 292 enquiries about letting fee issues. In 72 of these chats, the adviser felt there was enough cause to give advice on how to report a landlord or letting agent over a prohibited fee.
A spokesperson for the National Trading Standards Estate and Letting Agency Team said: “The National Trading Standards Estate and Letting Agency Team delivers training and provides resources to enforcement officers within Local Authority Trading Standards, Environmental Health and Housing Departments across England to help local authorities adopt a consistent and a coordinated approach towards enforcing the Tenant Fees Act (2019).”
The spokesperson said they are now seeing some authorities take action against agents who seem to be charging prohibited fees.
“Many tenants find themselves in vulnerable positions and are concerned about retaliatory action if they complain about prohibited tenant fees. If you’re a tenant, we want to make sure you’re absolutely clear: the landlord is not allowed to serve an eviction notice if they haven’t paid back prohibited tenant fees. If you know of any letting agents that continue to charge prohibited fees, we urge you to report them to the Citizens Advice Consumer Service on 0808 223 1133.”
The Government told i that if landlords and agents appear to have broken the law, it is determined to take action. "Councils, supported by a Government-funded enforcement authority, are currently investigating 18 cases with potentially £45,000 worth of financial penalties being issued.”