Here is a question to the blog clinic from Lucy who is a tenant
Our letting agent is charging us £420 to renew our contract, saying that this is for “the cost of referencing, to make sure you are still in a financial position to service the rent liability and documentation charge.”
This seems excessive. What options are open to us to challenge this?
Charges by agents for ‘renewals’ have long been a vexed question. It is massively unpopular with both landlords and tenants (as some of the less reputable agents will charge a fee to both).
The better agents do not charge a renewal fee, and my understanding is that it is something which is mostly done in London.
An unjust fee
There is no real justification for a renewal fee. Unlike at the start of the tenancy, it is not appropriate for the tenant to be re-referenced. They are already in occupation of the property. In any event, the cost of referencing is considerably less than £420 (unless prices have changed dramatically since I last checked them out).
In Scotland this sort of thing is now illegal and there are calls for them to be made illegal in England too. However what should a tenant like Lucy do when a demand is made for this sort of fee?
What you can do
One suggestion is to get in touch with the landlord and have a word with him (or her). Chances are that they too have been invoiced by the agent for a ‘renewal fee’.
If the landlord doesn’t want to know, then you can refuse to pay and just stay in the property under a ‘periodic tenancy‘. Most tenants don’t realise that their tenancy will automatically run on, on a periodic basis after the fixed term ends.
Many tenancies run on quite satisfactorily for years under periodic tenancies However you will not have the additional security of a fixed term.
The worst that can happen
If you refuse to pay, what can the agents do? Well, provided you are paying your rent, the worst they can do is serve a section 21 notice on you. But they cannot actually require you to leave without getting a court order for possession first.
Getting a court order for possession will require action (and the cost of legal fees) from the landlord who will in most cases be unwilling to evict a good tenant simply because they don’t want to pay £420 to the letting agent for a renewal. So I think it is unlikely that this will happen.
You should therefore be reasonably safe in refusing to pay the fee and just staying put.
Shelter are running a campaign about unjustified agent fees so I would suggest you also complete their survey, which you will find >> here.
What other fees have readers been charged by letting agents as renewal fees?