Charged for Contract Renewal without Notice of Fees

Question

Due to changes in UK law, landlords are now only allowed to hold a maximum of 5 weeks' rent.

When I inquired as to how the excess would be returned to me, I was told it wouldn't be until I quit my property as my tenancy was due to move onto a statutory periodic (from a fixed term shorthold). In order to get around this, the estate agent said they would renew me onto a contracted periodic instead.

I got an email yesterday telling me that they've deducted £90 admin cost from the deposit excess for drafting this contract. I was never told that this charge existed and would not have allowed them to draft the new one if I did.

Can they insist on this charge or is the law on my side?

Answer 1

When I inquired as to how the excess would be returned to me, I was told it wouldn't be until I quit my property as my tenancy was due to move onto a statutory periodic (from a fixed term shorthold)

This implies that the original tenancy agreement (and hence the fixed term) began before 1 June 2019. It is indeed the case that, under these circumstances, the excess doesn't have to be returned to you*:

Q. If I paid a tenancy deposit which exceeds the cap before 1 June 2019, can I ask my landlord or agent to re-pay the amount of the deposit above the cap?

No. Landlords and letting agents are not obliged to immediately refund part of a tenancy deposit that is above the cap but was paid before 1 June 2019. If you signed a tenancy agreement before 1 June 2019 (and your tenancy is continuing or is a statutory periodic agreement) then you will be bound by the terms of that contract until it is either renewed or terminated. [Page 40]

Regarding the renewal fee:

they've deducted £90 admin cost from the deposit excess for drafting this contract.

That is legal for now, as long as it was in the tenancy agreement:

if the tenancy was entered into before 1 June 2019 and you agreed in your contract to pay fees to renew your tenancy then a landlord or agent can charge these fees for a new fixed-term agreement or statutory periodic agreement up until 31 May 2020. [Page 29]

The OP says:

I was never told that this charge existed

Check the tenancy agreement. If this was mentioned there, then it is legal

(* All quotes taken from "Tenant Fees Act 2019: guidance for landlords and letting agents (updated July 2019)", issued by HM Government here.)

Answer 2

The Tenant Fees Act 2019 caps the holding deposit to 1 week, and a security deposit to 5 weeks.

https://www.tenancydepositscheme.com/learn-more/information-tds-lounge/guides/depositcap/

Holding deposits are capped at one week’s rent; Security deposits will be capped at five weeks’ rent where the annual rent is less than £50,000 and six weeks’ rent where the annual rent is £50,000 or more.

What your estate agent is saying is that your deposit would not be returned until the statutory periodic contract is terminated, as is the usual case with deposits.

In order to circumnavigate this, they have offered to terminate the current contract, and replace it with a contractual periodic, which allows the deposit to be released.

Unfortunately, for writing a new contract, they have charged you their usual fee of £90.

This document:

https://www.tenancydepositscheme.com/wp-content/uploads/2019/09/ukpgaen_20190004_en.pdf

is the guidance notes for the Act, and on page 5, item 7 is:

The Act requires agents and landlords to refund the holding deposit except in circumstances where the tenant withdraws, fails a right-to-rent check or fails to take all reasonable steps to enter into the tenancy when the landlord or agent has done so. The agent or landlord may also retain the holding deposit if the tenant provides false or misleading information and the landlord is reasonably entitled to take into account that false or misleading information or the tenant’s behaviour in providing it in deciding whether to grant the tenancy because this materially affects their suitability to rent the property.

which hints that what your estate agent has done is illegal, but only refers to holding deposits, and you imply in your question that you have a security deposit.