The question of whether pre-tenancy charges imposed on tenants by landlords/agents under a short assured tenancy are legal is a long-running debate within the private rented sector.
Many landlords/agents charge a variety of fees to a tenant prior to sign-up, including administration charge, 'holding deposit' and 'referencing fee'. We've even heard of agents charging fees to prospective tenants for cleaning the property after they have left, when they've not even moved in yet!
Section 82 of the 1984 Act states that ?any person who, as a condition of the grant, renewal or continuance of a short assured tenancy, requires, in addition to the rent, the payment of any premium or the making of any loan shall be guilty of an offence
Under Section 90 a deposit returnable at the termination of a tenancy is excluded from the definition (so long as it doesn't exceed the equivalent of two months rent.) In effect, this means that any payment sought by a landlord/agent which isn't rent (or a deposit as security) is an unlawful premium.
It's accepted that it's common practice for most landlord/agents to charge some sort of up-front fee. The argument that we regularly hear everybody else is doing it so why can't we doesn't take away from the fact that the fee could still be illegal!
Most landlords wish to take references for prospective tenants. If the tenant doesn't want to produce a reference themselves and asks the landlord/agent to write to a nominated person, then the landlord would be entitled to be reimbursed for the actual cost of doing that. However, non-returnable holding deposits charged by landlords/agents to take a property off the market, and which are not deducted from the security deposit, are entirely unlawful.
The Private Rented Housing (Scotland) Act 2011 aims to clarify the position and achieve consistency throughout the practice of agents. Section 32 allows Scottish Ministers to specify what sums will not be treated as a premium, and designate maximum amounts for such sums. Before making the regulations, there will be a consultation.
As yet it is unknown when such regulations will be made, or even when the consultation will be held. However, Letlaw will update you every step of the way. In the meantime if you have any queries, please get in touch.
