Letting Agents Could Unknowingly Break the Law after Tenant Fees Ban
Rose Jinks - January 15, 2019
Letting agents in England could unknowingly break the law
after the tenant
fees ban comes into force, due to a possible flaw that has been found by
The lawyers were helping a tenant referencing company review
its terms and conditions when they found the potential flaw.
The legal experts are warning that letting agents could be
caught out by using other industry services as part of their lettings
processes, for example, repairs reporting systems and inventory firms.
Tony Williams, the Managing Director of UKtenantdata, says: “Reviewing our
terms on an annual basis is standard practice for our company and, with the
tenant fee ban on the horizon, it made sense to identify changes that may be
lawyers identified an issue that could place every single letting agent in
England in a position where they are unknowingly breaking the law.”
explains: “The current Bill states that an agent cannot charge a tenant a fee,
nor force an applicant to contract with a third party.
the agent would still be in breach of the proposed legislation, because the
applicant would still have to agree to our terms pre-application and, therefore,
would be contracting with us.”
continues: “So, in short, this would prevent an agent from performing any due
diligence checks on tenants.
Bill goes through in its current form, this will create a major issue for
Bill is set to have its third reading in the House of Lords today (15th
“Prohibitions applying to letting agents
“(1) A letting agent must not require a relevant person to make a prohibited payment to the letting agent in connection with a tenancy of housing in England.
“(2) A letting agent must not require a relevant person to make a prohibited payment to a third party in connection with a tenancy of housing in England.
“(3) A letting agent must not
require a relevant person to enter into a contract withthe
agent or a third party in connection with a tenancy of housing in Englandif
the contract is –
(a) a contract for the provision
of a service, or
(b) a contract of insurance.”
Williams says that one point in the Bill is clear:“As an agent, you simply can’t take any money from the tenant if it’s connected to the grant of a tenancy. That is clear.
point two is clear.”
he says that it’s point three that is problematic.
the letting agent or landlord will have absorbed the cost of the due diligence
process after the ban comes in, so that there are no cost implications for
either the prospective tenant or guarantor.
it is what happens next that could cause difficulties.
explains: “The applicant receives their application link, enters the
application area and, before proceeding, agrees to our terms and conditions.
believe it or not, the applicant has just contracted with us (the third party) and
the agent has broken the law. It really is that simple.”
believes that other providers will also be affected.
says: “The Government’s proposed legislation doesn’t just affect the applicant
due diligence process; it will knock on to other areas of the industry where an
agent outsources to third party providers where there is no cost involved to
services could include inventory providers, who require the tenant to access
their platform to view the property inventory and post back comments, or where
agents have property issue reporting systems in place as part of their
points out that contracts are created when they require the tenant to agree to
the third party terms.
“To both myself and our lawyers, it looks like the Government hasn’t thought
this through. Looking at the legislation now, it really is glaringly obvious
that this is a potential issue and, frankly, I can’t understand why this hasn’t
been picked up previously.
really is an area of concern and will potentially cost letting agents thousands
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