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As a tenant I am served up a new "Assured Shorthold Tenancy Agreement" every 6 months where I live by the Letting agent my landlord uses.

I have previously debated the renewal fees and their fairness but continue to pay these fees on the bases that the letting agent usually says "pay or we will take legal action as stated in my tenancy agreement I agreed to this".

So, this morning I was woken up by some random ideas going through my head.

  1. If i'm paying these fees then the landlord is too
  2. are they actually unreasonable
  3. I know they aren't illegal but are the side effects worth it if I were to fight the agent on this.
  4. would I also be fighting my landlord or just the agent

...

So I did some digging in my tenancy agreement ...

Key useful pieces of information:

  1. Deposit paid £1,800
  2. Term of tenancy 6 months
  3. Type of tenancy: Assured Shorthold

Key terms that help clarify my situation ...

6.1 The Agent shall place the Deposit in a nominated Client account as soon as reasonably practicable. Any interest earned on the Deposit shall be retained by the Agent, and used to cover administration costs.

9.9 To Pay £100.00 + VAT for each extension of the Tenancy

So lets get some figures together here ...

At the time I write this question out the bank of england base rate is about 0.5% with typical interest rates on bank accounts ranging from around 1% to 4% per annum.

lets a assume a low interest rate on a typical bank account of around 2% is put on that deposit each year so the agent receives £360 for doing literally nothing.

Then 6 months later they get another £120 from me for opening up the existing digital copy of the contract they have for me and moving the dates on by 6 months and printing a couple copies then charging me to sign them.

so, per year the agent gets £500 for sending out 2 copies of the same document 2 twice and then filing it away.

... and that's just what they charge me.

It's reasonable to assume the agent is charging the landlord too, and probably similar figures.

...

I have some options ...

  1. Simply refuse to sign new agreements and risk eviction.
  2. Sign the agreements but then have to justify to a judge why refused to uphold clause 9.9 in the contract.
  3. Contact the landlord direct and agree the stupidity of these costs in order to put in place a longer term agreement (assuming he's willing)

...

I have also noticed that there may be some precedent to argue the fees under the Unfair Contract Terms Act 1977 but that's vague and may not directly apply here.

In Scotland however I noticed that such fees have been made illegal and pressure is mounting to make it law here.

So, my question is ...

Have I explored all the options here and if not what other possible routes could someone go down if presented with this situation?

  • 1
    Check your arithmetic. 2% of 1800 is not 360. – Nate Eldredge Sep 15 '16 at 6:17
  • 1
    Also if they're charging £100.00 + VAT, they are not keeping the VAT. So I believe the agent's take is £136, not £500. – Nate Eldredge Sep 15 '16 at 6:20
  • the £100 fee is due 2 times a year so the agents takes at least £200 + interest on the deposit ... my bad on the 2% though (it was 5am when I wrote that) ... still reasonable to assume the agent is taking £236 a year though for printing a 10 page document a total of 4 times. – War Sep 15 '16 at 7:22
  • The agent does more than just print rental contracts. Whom do you call when something goes wrong? – phoog Dec 14 '16 at 14:16
  • You're joking right? I call the agent who then passes a message on to the landlord, in the event there's any work to be done either I pay or the landlord does, the agent simply pays for a few calls. If only I could charge them for all the calls and emails and letters or trips to their offices when they screw up it would be fair! – War Dec 14 '16 at 21:24
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There are two separate issues here.

Firstly, the deposit. Any deposit is required by law to either be placed in an approved deposit scheme provider at the start of any tenancy, or be insured with a provider. Either way, the landlord (or their letting agent) is required to issue the tenant with certain prescribed information within a certain period, as well as meet a few other requirements.

Failing to do this can result in the landlord having to return the deposit and pay a fine to the tenant - if the tenant is willing to take him to court.

If the landlord has done everything by the book, they don't owe you anything. (If they've paid the deposit into a scheme, then they will not receive any interest, as it's kept by the scheme provider to pay for their services.)

Secondly, the renewal fee. These are legal and commonplace. However, you're never obliged to renew your tenancy, as if the fixed term expires and you don't leave, then it automatically becomes a statutory periodic tenancy (often called a "rolling tenancy").

With a periodic tenancy, you can leave by giving one month's notice in writing; or your landlord can request that you leave by issuing a section 21 notice, which gives you two months to depart or face legal action.

If you tell the landlord that you would like to change to a periodic tenancy when the current fixed term ends, then no-one has to do anything (though the letting agency may charge you an admin fee). The landlord cannot impose a new tenancy agreement, but they can issue a section 21 notice.

Or, as you suggest, you can request a longer fixed term. This provides more security for you and the landlord - though it makes it harder to leave early, as you're potentially liable for the rent for the whole term.

  • The deposit is registered in the appropriate way with a scheme provider but the money is actually held in an account managed by the letting agent. I believe this is legal as long as they do not touch that money without the approval of the scheme provider which is usually only given when all parties are in agreement (there's quite a bit about this in other terms of the tenancy agreement) – War Sep 15 '16 at 14:28
  • I previously stated that I would prefer to roll in to a periodic tenancy agreement and the letting agent responded with "sign a new agreement or move out", they have even stated that not signing means that they would serve me a section 21 notice but I haven't yet been pushed enough to test the theory as I'm not sure where that would leave me. Should I get served a section 21 could I then after that sign and return a tenancy agreement? (probably but the agent may play hard ball at that point) – War Sep 15 '16 at 14:31
  • Last time we spoke about this I also requested a longer term between signings and got near immediate response by email saying "request denied, not what the landlord wants" ... i seriously doubt the landlord was even asked as this is not in their interest to action and the fast response suggests they just denied it out right. – War Sep 15 '16 at 14:32
  • Sadly, the landlord/letting agency can always threaten a tenant with the prospect of a section 21 if the tenant refuses to comply. If you were served a s21, and then signed a new tenancy agreement, I imagine that the s21 would then become redundant (and it would expire after 6 months regardless). I would always argue that a good tenant is worth keeping, and hence a little flexibility doesn't hurt...but not all landlords agree... – Steve Melnikoff Sep 15 '16 at 14:53
  • Re deposit: insurance-backed schemes (which it sounds like this is) charge a fee to the landlord/letting agent. This is probably still less than the interest gained - but it's academic. If the contract that you signed doesn't mention interest, then you're not entitled to any. – Steve Melnikoff Sep 15 '16 at 14:56

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