Private sector updates

Section 8 notice prescribed form

The Govt has made The Assured Tenancies and Agricultural Occupancies (Forms) (England) (Amendment No. 2) Regulations 2016. The Schedule contains a new ‘form 3’ – the prescribed form of Section 8 Notice Seeking Possession. This must be used for s.8 notices served on or after 1 December 2016.

The change is to incorporate reference to the new ground 7B introduced by Immigration Act 2016, also taking effect from 1 December 2016.

Letting Agents

In the Autumn Statement, the Chancellor, Philip Hammond announced that:

We believe that a market economy is the best way of delivering sustained prosperity for the British people. We will always support a market led approach; but we will not be afraid to intervene where there is evidence of market failure.(…). In the private rental market, letting agents are currently able to charge unregulated fees to tenants. We have seen these fees spiral, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees. So I can announce today that we will ban fees to tenants as soon as possible.

This was a surprise (at least until the evening before) as both the Housing Minister and the Prime Minister have previously opposed an outright ban on Agents charging tenants in England (Scotland having already banned it).

As ever, the devil will be in the detail (and the timing).

But one hopes that the message to letting agent (and indeed landlord organisations) is that a PR approach based wholly on ‘if you do that we will pass the costs on to tenants directly and so rents will go up’ has failed and is unlikely to have much traction in the future. After all, the rents keep going up anyway. (2.5% in the last year in England according to the ONS). Do, please, come up with a better PR line for future (and indeed ongoing) issues.

But Agents have really, really not helped themselves. Every survey indicates that at least half, if not the majority, have failed to comply with the requirements to make public their fees to both tenants and landlords on their website and in their office, despite these legal requirements now being almost two years old. Fees for a ‘replacement tenancy agreement’ – usually a simple re-date of the previous agreement – are charged at a rate that would even make any solicitor’s eyes water.

And, of course, there is the problem of the concept of agency. Even ARLA never grasped this. As one agent put it to me on twitter

“In practice an agent a person who acts on behalf of the landlord. The customer is still the tenant”. 

Well… No. If you are the landlord’s agent, you are the landlord’s proxy. You are entitled to charge the landlord for that service, but technically, legally, you should then account to the landlord for any profit that you, as agent, make from charging the landlord’s tenant.

You as agent don’t have both parties, landlord and tenant, as clients. (This is a simple observation that any lawyer understands, but it is one that has escaped the entire letting agent industry and their trade bodies like ARLA). If you as agent are drawing up a new tenancy agreement, this is on behalf of the landlord. You don’t also (or solely) get to charge the tenant for doing so – or not, at least, without having to take the client’s instructions on the agreement and being answerable to them for any defects, (which of course is not really part of the deal), or without accounting to the landlord for the profit you have made from the tenant on the fee for the agreement.

Oh, and the agents’ wails of ‘having to pass costs on to landlords, who will pass them on to tenants in rent increases’? Well, letting agents may be the only bit of the housing world where there is actually a semi-functioning competitive market. So have fun trying that for long, because your competitors won’t.

 

 

 

 

About Giles Peaker

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, assured-tenancy, Housing law - All, Possession and tagged , , .

17 Comments

  1. As a novice in the *provider* sector, SHE Project Burnley has operated what is commonly known as R2R model for women leaving prison.

    While this model is widely critiqued, SHE Project is a service that is resourced and regulated by its funders. I have to add, R2R models work when correctly underwritten by a housing lawyer.

    However, one of the major factors in our service provision, has been my research into letting agents in East Lancashire. Many of which are GLAS approved by the Local Authority.

    Our work has now transmitted to community based work. And out of every family, the largest need is raising administration fees in order to access a home.

    What I have witnessed is nothing short of shotgun administration from letting agents. *Admin fees* are set and every application has been placed as eight weeks in arrears from the start of the AST.

    What is also readily available is the tenancy agreement. Interestingly, in our area, it’s in the name of C/O of the letting agent. Effectively depriving the tenant of knowing whom the true LL is.

    As for *banning* letting agents fees, at face value yes, but I’d like to know where deposits are placed. I suspect deposits,which are legally obliged to be placed in one of three TDS, are no longer. *Admin fees* are being used in order for an regulated letting agent sector in order to sustain cash flow.

    I’m pleased to see the *banning* of letting agents fees. I’m always grateful to you, Giles, for your advice on this blog. I’m an avid subscriber.

    However, ever the cynical, I’m just not convinced this is the end.

    SHE Project does not charge any administration fee. Nor do we take a deposit. Nor do we charge for a tenancy agreement.

    Effectively, a person can move into our leased properties, with no upfront fees.

    We don’t get the exempt housing benefit payment either. And SHE accepts those people that every computer would say no to.

    So, I’ve seen every letting agent demand fees for everything bar an inside leg measurement.

    And I’ve seen floating support staff apply for admin fees for people excluded from mainstream housing options.

    Bring back deposits. I say. Regulate the private rental sector and I work with wonderful private landlords whom are content to subscribe to a service where we can hand back the property with a tenant whom is supported and more often than not, paying the rent directly.

    I’ve seen more skullduggery in letting agents than I have in private landlords.

    Thank you, Giles.

    • Well, deposit schemes are either custodial – the scheme holds the deposit – or insurance – the landlord or agent holds the deposit money, but it is insured, so there for tenant.

      We will have to wait to see what the timescale and detail is of banning fees…

  2. Tracey, would love to learn more about R2R (although not really sure what that means) Is that where a business rents a property under business tenancy under LATA 1954 and rents out HMO properties with a management agreement with the landlord?

    Anyway, re fees I’m interested you mention the ‘end of the deposit’ certainly seen some evidence of this myself but not so widespread. in the area you mention is there a compulsory/mandatory licensing scheme for landlords and/or agents or a range of these. I the area is there a trend towards this, and have you witnessed more of it since licensing (I’m in the sector in Wales hence the licensing interest in relation to deposits)

    I would have thought in the most typical of circumstances a landlord would always want a deposit..

    (Wasn’t sure what GLAS was either ?)
    Thanks

  3. Pingback: Ben Reeve Lewis Friday Newsround #275 » The Landlord Law Blog

  4. Here are my fees charged to the tenant and this is a ONE OFF, i do not charge for renewing or an additional occupant this is it transparent and on my website and approved by Trading Standard. I am a small home run business to keep the cost down for Landlords and Tenants. I have a great business relationship with my landlords and tenants . This ban could potentiall put small business’s out of business. The government should have had tougher laws and had these checked when agents had to be transparent and join the PRS.
    I whole hartedly agree there are some agents out there that charge horrific fees , some even charge to attend a viewing. So small business like mine are stuck in the middle. I am inundated with tenants requests simply due to not charging the amounts the BIG AGENCIES DO.

    FEES
    Application Fee of £100.00 per property.
    This includes the following:
    Credit check for lead tenant (including guarantor if required): £30.00
    Administration fees (Preparation of Tenancy Agreements, Deposit Scheme lodgements including Right to Rent checks and reference checks) £70.00

    Should the application be rejected you will receive a refund of £70.00 less any referee’s charge if applicable.

    Important information regarding reference checks: Your chosen referee may charge to provide a reference. This is typically between £0 and £40. Please check your referees fees with them before submitting your application. Should we need to obtain or verify a reference but the application be rejected, you will receive a refund of the administration fees less the referee’s charge.

    • Hi Sheralyne. While I am sure what you charge is effectively cost only (and it is a problem if it isn’t) and thoroughly reasonable, it is still rather missing the point of agency.

      Who requires the credit check? On whose behalf are the right to rent checks done? Whose responsibility is it to protect the deposit, in law? Who demands references? The answer to all of these questions is ‘not the tenant, but the landlord’. You are not doing them on the tenant’s behalf, but on the landlord’s behalf.

      Think about it – preparation of the tenancy agreement. Who is your client for that? Are you representing the tenant’s interests against the landlord? No? Then you don’t get to charge the tenant as if they were a client.

  5. And as you predicted the NLA is trotting out the same PR https://www.linkedin.com/pulse/our-response-proposed-ban-letting-fees-press-officer?trk=hp-feed-article-title-share

    This garners no sympathy for the landlord industry, this approach of every time you try to regulate us we will punch the tenant in the face and its YOUR fault.

    Call me old fashioned, but why does every cost have to passed down the line? Why cant landlords absorb the hit for once?

    Its ‘Sophie’s Choice’, ‘Hobson’s Choice’, ‘Would you rather lose an arm or a leg?’ choice

  6. Pingback: How the Great Letting Agent Fee Ban could be Good for Some Agents » The Landlord Law Blog

  7. Pingback: Banishing Letting Agents Fees Will Help Make Private Renting A Little Less Terrible – Hub Politic

  8. Perhaps enforcement of the laws already in place might be a start. You can try to regulate but unless there is a rigorous enforcement more laws won’t change anything.

    • There is currently no regulation of letting agent fees to tenants in England, so nothing to enforce. There is the requirement to display the fees, which is widely ignored by agents.

  9. At least landlords didn’t get another bashing in the statement & this time it was on agents! There’s a good regulatory round up of new and up-and-coming legislation here: [removed by NL, as advertising]

  10. Hi Giles. I’ve just been advised by NHAS that if landlords or agents do not use the latest, correct, version of Form 3 (and that’s the only defence) that County Court Judges are still likely to grant possession with an older version. is that your experience? I only ask because you mentioned above that the latest version ‘must’ be used.

    • Hmm. The change was to include the Immigration Act added grounds for possession. I suppose if that was not involved, courts might be apply a ‘substantially to the same effect’ test.

  11. Hi again.
    Can a s8 notice be used after the end of the fixed term for an AST (where a s21 would normally be used) if there doesn’t appear to be a term in the tenancy agreement allowing the landlord to re-enter or terminate the tenancy for a breach of any condition in the tenancy or where one of the grounds for possession against assured tenants exists (as per HA 1988 s 7(6) (b))?

    • I’m not getting it. S.7(6)(b) is during fixed term. But how on earth would you use a s.8 notice if there is no Schedule 2 ground for possession?

Leave a Reply (We can't offer advice on individual issues)

This site uses Akismet to reduce spam. Learn how your comment data is processed.