Tenancy Renewal Fees

Question

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?

Answer 1

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.

Answer 2

The agent should not and cannot charge you any fees for renewal due to the tenant fee ban Act 2019. The agent is in breach of the Tenant Fee ban Act 2019 and to breach this Act has consequences for the agent and landlord. I dug this blog out which will I hope lend clarity to the issue: https://landlordadvice.co.uk/tenant-fees-act-2019/