A helpful Tenant Fees Act reminder: An agreement is whatever it should be

Taking a break from the Renters Reform Bill for this week, we are going to look at the last huge piece of industry shifting legislation, the Tenant Fees Act. Those following updates on the Tenant Fees Act would have likely been disappointed to date. Often where there is ambiguity in the wording or interpretation of new legislation (as there is with the Tenant Fees Act), interested parties look to cases as ways to offer guidance on this ambiguity. However, there has been precious few cases like this relating to the Tenant Fees Act indicating either an industry-wide dedication to ensure compliance, that the issue was not as bad as initially advertised or that there has just been an unwillingness by parties to enforce. In reality, it is likely that it is a mix of all three.

Nonetheless we now have a new case which offers a further reminder that an agreement is not just whatever you want it to be.

 

In LON/00AY/HTC/2022/0001 Re: Flat 15, Goldsborough House, Wandsworth Road, London SW8 2RN, the First Tier Property Tribunal were asked to determine the lawfulness of agency fees charged by Foxtons at the start of an agreement. The Agreement was only 8 weeks long and so Foxtons instead of using an Assured Shorthold Tenancy (AST) agreement, used a type of short let agreement presumably using the common misconception that an AST cannot be for under 6 months. As such they worked on the basis that the Tenant Fees Act did not apply and so insisted on payment of agency fees to cover the costs of pre-tenancy works like viewings, verifying referencing and drawing up the contracts which would normally be prohibited payments.

 

In this case, the tribunal rightly highlighted that the length of the tenancy is not a determinative factor in the type of agreement particularly with AST anymore following the amendment of the Housing Act 1988 by section 19A the Housing Act 1996. Therefore, unless there are other reasons that an agreement should not be covered under the Housing Act 1988 i.e. tenant is a listed company, the rent is over £100,000 a year, the tenant is visiting on a genuine holiday etc. then the default agreement is likely to be an AST. If an AST is not used, then the agreement will be read to be whatever it should be and failure to follow the correct procedure for ASTs, i.e. registration of deposits, can be penalised.

 

We previously wrote about how errors in understanding of the law resulted in significant penalties, in that case it was a Rent Repayment Order. This is a further example that ignorance is seldom a defence and crucially, appropriate advice at an early stage is so important.

 

If you do find yourself in the situation and further advice, representation or training is required, I can be contacted on [email protected] to provide a quote.