Here is a question to the blog clinic from Diane who is a tenant:
I have just received my draft tenancy agreement for the new property I am about to move into and on reading it states that every 6mths I will need to go through a credit check/referencing @ £80 plus admin charge@£80.
So every 6mths I will have to pay £160 to stay in the property. I have been living in rented property now for 6yrs and have never had to have referencing done again. Can they do this?
My view Diane is that, no they can’t, and that this clause will be considered unfair under the Unfair Terms in Consumer Contracts Regulations.
If you have signed this tenancy agreement my view is that you can refuse to pay this fee, and if the landlord insists on it, refer the tenancy agreement to the Unfair Contract Terms section of the Office of Fair Trading.
Or your local trading standards office which will also deal with this.
Of course by doing this you risk the landlord serving a section 21 notice and requiring you to vacate after the end of the fixed term …
What about if this cropped up because the tenant did not fully pass referencing first time round? Potentially any rent and legal insurance could be invalidated if the tenant is not a full “pass”?
The obvious answer to this is that the tenant should not be let in, in the first place unless they had passed the referencing.
It is a bit late to reference them when they are already in situ!
Tessa, I’m not sure it is quite as clear cut as you suggest. What part of the OFT guidelines are you relying on to consider it an unfair term?
Agents still have a certain amount of freedom in relation to what they can charge fees for and how much they are. Unless you’re in Scotland of course.
As far as I can tell this is not a penalty. It is also charged at a specific amount at a specific time and it has been been clearly communicated to the tenant in advance (otherwise they wouldn’t be considering it and asking about it now before they signed the agreement).
If it were buried in the agreement small print I might be inclined to agree, but if it is communicated to the tenant separetly in advance I’m not so sure.
It is certainly expensive and I would try and negotiate or go and find another agent, but that doesn’t automatically mean it is un unfair term.
Could it be that the second £80 is actually for renewal administration? It would be intersting to see what the actual documentation says.
The real problem is that the agent will say in any reference that the tenant refused to pay charges, therefore making it very hard for the tenant to rent again.
Personally I would find somewhere else to live, and then report the agent to trading standards etc., as well writing to the landlord explaining why he/she has got a void that he would not have had with a different agent.
Maybe try contacting the landlord directly to say you would love to rent their property and only if they did it var a different agent, explaining the reason. Until landlords know if/when their agents are costing them money, they will not put pressure on the agents to change.
@Ian – those are some really good suggestions Ian.
Personally I think the charges are outrageous, but I am lucky, I have my own house – I am not struggling to find somewhere to rent.
Don’t get me wrong, I agree with you that the fees are completely outrageous, but that’s our personal opinion. I don’t think it is a foregone conclusion that it would be considered an unfair term under the OFT guidelines or consumer contract law. I’d be interested to know which specific part you think it breaches.
It would be unwise to potentially prejudice the tenant by advising them not to pay the fees without seeking proper advice first.