agents fees yes or no

[steveeasy]

Hi,
Applying for a tennany on a property. I asked the agents if fees existed and was told they could not charge fees anymore as the property could not be let before 1st june. Ive been told our application is successful and asked to pay a holding deposite. they then go on to say these are for referenceing checks and if you fail you loose your holding deposite.

is this a application fee then. are agents just giving fees a new name ?.

Thanks
steveeasy

[R0b]

Hello

The new Tenants Fees Act comes in force on 1 June which regulates what landlords and letting agents are entitled to charged. They are categorised into permitted payments and prohibited payments.

I've not looked at the TCA for a couple of months but if I recall a holding deposit is put down to secure your place i.e. a reservation and if your application is not successful or the landlord decides not to let the property to you, then it should be returned to you.

Reference checks and credit checks are now considered to be prohibited payments so if the letting agent is saying that's what the holding deposit is for, then they will be in breach of the law, although strictly speaking that hasnt come into force yet.

Have a Google of Tenancy Fees Act and holding deposit, you will find plenty of information about what can and cant be charged.

Before you decided to proceed you would be wise to get the letting agent to confirm in writing what the holding deposit is for so that you have evidence in the event of a dispute.

[steveeasy]

Ive been looking around at agents and most now have in place this holding deposit scheme. in principle it sounds a good idea, an applicant pays a fee to secure the property while the agent carrys out ref checks. they say however if you fail you have lost the fee. some say if you make false representations you lose the fee. so nothing is in black or white.

Ive paid the fee. your then told you have to accept terms and conditions you have not even seen or your lose your fee. Has this been thought out properly. tenants cant be obliged to sign a tenancy with extra conditions added or they will lose what is supposed to be a holding fee. not a fee to carry out admin work. the costs for this should be carried by agents or their clients surely.

Steveeasy

[R0b]

The TCA is a new piece of legislation and as with any new Acts of Parliament, there will be grey areas that need to be ironed out by the court system over time.

Letting agents will obviously make their own interpretation of how the TCA applies but the government has deliberately set out guidance for both landlords/letting agents as well as tenants on their responsibilities and I think you should read that guidance because that's what the court's will look to when considering if the letting agent is in breach of the TCA.

I've attached both guidance here so you can see it from each sides' perspective. Information about holding deposits can be found starting on page 13 for the guidance for tenants and pages 33-34 for the guidance for landlords/letting agents.

In each of the guidance, it says that a holding deposit can only be retained where a tenant:-

* provides false or misleading information which you can reasonably consider when deciding to let a property – this can include a tenant's behaviour in providing false or misleading information

* fails a right to rent check

* withdraws from a property (unless a landlord or agent imposed a requirement that breached the ban or acted in such a way to the tenant or relevant person that it would be unreasonable to expect a tenant to enter into a tenancy agreement with them)

* fails to take all reasonable steps to enter into a tenancy agreement and the landlord or agent takes all reasonable steps to do so (unless a landlord or agent imposes a requirement that breaches the ban or acts in such a way to the tenant or relevant person that it would be unreasonable to expect a tenant to enter into a tenancy agreement with them).

Helpfully, page 12 of the tenant's guidance sets out the steps you can take if you think the letting agent has unlawfully retained the holding deposit. The guidance does say that the tenancy agreement should be given before the holding deposit has been taken (it says this in the landlord/letting agent guidance).

I am not so sure the letting agent can retain the holding deposit simply because you failed a credit check or a reference. If the letting agent has clearly set out what they require in terms of a credit worthiness tenant and thus ask you a series of questions but you either don't answer or provide false or misleading information, then they could probably retain the holding deposit. If, however, they are silent and simply say a credit check will be carried out, I can't see how that is providing false or misleading information.

[steveeasy]

Rob,
that was a very detailed and helpful post. I will read through the information carefully. of course no terms or agreement were shown or even discussed prior to requesting the holding deposit. they state it is needed for admin costs. prior to viewing I specifically asked if application fees whereto be charged and told they could not charge them as the property was to be let after june 1st. my interpretation of the holding fee was that it binded you to the eventual agreement, which it does, but they do no checks at all until they get your money then tell you you will lose it if you don't come up to their expectations. whos to know what they are. It will be an interesting week to see how it develops quite frankly.

Steveeasy

[R0b]

Your best bet is to keep all records in writing. If you need to call, record the conversation if you can or if that's not possible follow up with an email and confirm what was discussed.

Sounds like a dodgy letting agent whos trying to wing it but one of the key points is that if the letting agent wants to retain the deposit, they need to put it in writing and explain the reasons. This is why its important to keep a paper trail in case they try to change their story later down the line.

Will be interested to know the outcome - do keep us updated.

[steveeasy]

well it does raise some interesting points I will need to be clear on

Can a landlord or agent ask you to pay third parties for services. They say its a requirement to take out tenant insurance. never had to ever and it is a third party payment. I have now found in very small print if a pet is accepted a £50 admin will be added in preparing the contract. the add stated a pet may be considered. I provided details of this, given the application was accepted by the landlord with no indication an additional fee may be added, I cant how this fee can be automatically added to any future demands for payments. Surely they should have simply said the landlord will be happy but the tenancy will increase by, and that may be an unfair charge.

Steveeasy





.

[2222]

I hope this all works out. Bear in mind that most agents and landlords are more or less honest. Their aim is to let the property, not swindle tenants out of the holding deposit. So, I expect the chances are good that it will work out.

[steveeasy]

You may be right, but when you read the clear guidance, you cant help but wonder. It is very clear the guidance sets out that a draft tenancy agreement should be pr voided, and financial expectations discussed prior to requesting a holding deposit. its make sense really. how can you be bound to an agreement you have not seen. adding admin charges for pets on new tennancys not existing and insisting tenants take out liability insurance with third parties are excluded in the new guidance.
the website has a link that states the page is closed continue to the home page. having dug deeper for three days now ive found guidance on expected incomes per applicant relative to the rental value. in our applications our income is half that of the agents expectations.. they would have seen that when they reviewed the application so it will be interesting to see what they say after references. I expect they will say your income is too low. well they new that.

steveeasy

[2222]

Let's hope they don't find out until June.

[steveeasy]

well now the holding deposit is paid, they have come back to say our earnings might be too low for the referencing company. ive not responded to them yet. clearly by taking a holding deposit they are operating under the new guidance. the guidance sets it out clearly. show the tenancy agreement, discuss affordability, then holding deposit paid. seams their too keen to get their hands on the money.

ive looked at another agency tonight and they are equally confused.

Copy extracted
Once the landlord decides you will be a good tenant, you will need to pay fees to set up the tenancy to cover the cost of references, credit checks and arranging your rental

So they have got the first bit right, but then they go on to say the holding deposit covers the cost of referencing, credit checks and arranging the rental. Its not the case at all. the holding deposit, holds the property. they can only take from it if the applicant provides misleading information or fails the I think right to rent check.

why do they not know yet.

Steveeasy

[R0b]

I wouldn't get too hung up on what the letting agents are saying what the holding deposit is for, because the TFA is clear on what is permitted and what isn't. Has the letting agency actually said anything other than that your earnings might be too low though not sure what relevance this has to the referencing company.

Have they suggested that they are going to retain the deposit because your earnings are too low?

[steveeasy]

Just had an email from the agents wanting to clarify what our income is as the referencing company have minimum income requirements for levels of rent. So they are just raising the concern before pressing the button. for the property we have applied to rent the annual income per applicant is 36,000 so 2 applicants is 72,000. Our application showed earnings just under half of that. So With the best intentions its going to fail on that basis.

Bit late to tell me though. However we have been renting for past 5 years at higher rents. with references from our current landlord and current agents all good and clear credit history.


Steveeasy

[steveeasy]

Monthly Rent	Yearly income Per Applicant	£ Guarantor
£325	£9,750	£11,700
£350	£10,500	£12,600
£375	£11,025	£13,500
£400	£12,000	£14,400
£425	£12,750	£15,300
£450	£13,500	£16,200
£475	£14,250	£17,100
£500	£15,000	£18,000
£525	£15,750	£18,900
£550	£16,500	£19,800
£575	£17,250	£20,700
£600	£18,000	£21,600
£625	£18,750	£22,500
£650	£19,500	£23,400
£675	£20,250	£24,300
£700	£21,000	£25,200
£725	£21,750	£26,100
£750	£22,500	£27,000
£775	£23,250	£27,900
£800	£24,000	£28,800
£825	£24,750	£29,700
£850	£25,500	£30,600
£875	£26,250	£31,500
£900	£27,000	£32,400
£925	£27,750	£33,300
£950	£28,500	£34,200
£975	£29,250	£35,100
£1,000	£30,000	£36,000
£1,025	£30,750	£36,900
£1,050	£31,500	£37,800