What fees can agents charge when there is a change of tenants?

Contrary to what many tenants think, there is quite a lot of work involved when tenants request a tenant change.

Agents will normally charge these fees to the tenants rather than the default £50 provided by the Tenant Fees Act.

For example  Ludlow Thompson, a well-known agent, charged £393.54 recently for a tenancy assignment after a tenant sought to leave their tenancy early and an assignment to another tenant was agreed.

The costs break down was:

• Referencing the new tenant: £23.94
• Inspection £58.80
• Creating new tenancy agreement £274.80
• Re-registration of deposits £36

However the tenant appealed to the First-Tier Tribunal and rather to everyone’s surprise, the tribunal agreed with the tenant.

They took the view that the legislation should be interpreted as meaning that the default was £50 and in order to charge more the situation had to be out of the normal run of events.

A distinction was drawn between the assignment and other provisions in the Tenant Fees Act, for example, damages, which just have to be reasonable without any £50 qualification.

The Tribunal claimed that the government guidance supports their interpretation and that it is also was in keeping with the purpose of the legislation.  Which is to regulate the actual level of fees and not just to require them to be reasonable.

The Tribunal added that there was no reason for the situation to be extraordinary to justify a fee of over £50 but said it had to be something different from a normal change of tenants.

A bad decision for tenants

This is going to be a problem for agents, and also a problem for tenants.

Because landlords don’t have to agree to a change of tenant.  If they are going to be charged extra fees by their agents (because the agents are not going to do this work for free) most landlords will probably refuse to agree to any change before the tenancy comes up for renewal.

Meaning that the outgoing tenant will remain liable for the rent, even if they move out.  Which they will not want.

Hopefully, this decision will be challenged fairly soon.  Over time £50 will become worth less and less in the scheme of things and Parliament tends not to update specific fees in legislation.