Assignment of Tenancy – can agents and landlords charge tenants?

man signing a tenancy agreement

The First-Tier Tribunal has made a decision that could have a serious impact on agents and private landlords.

The Tenant Fees Act 2019 (TFA) provides for what fees can be charged and when. In terms of the TFA, a tenant can be charged a fee if they want to leave early (before the end of the tenancy) and put another tenant in place, of themselves.  Under the TFA the fees allowable are either £50 or “the reasonable costs of the person to whom the payment is to be made in respect of the variation, assignment or novation of the tenancy”.

Agents, however, often charge more because they feel this amount is not enough to cover the costs that they actually incur. One such agent, Ludlow Thomson (Agent), charged £393.54 for a tenancy assignment when a tenant left early, and a new tenant was arranged. The Tenant however thought this was not reasonable and took the Agent to the First-Tier Tribunal.

The Agent explained his costs to consist of the following items: referencing the new tenant: £23.94, inspection £58.80, creating new tenancy agreement £274.80, re-registration of deposits £36.

The Tribunal sided with the tenant, asserting that the legislation interpreted a default position to £50. Therefore, to charge beyond this would require extra circumstances to a normal replacement of tenant. Moreover, the Tribunal made mention that the Government’s guidance supported their argument and complied with the purpose of the legislation, which was not just to require reasonable fees, but to regulate the level of those fees as well.

A concern here is that landlords do not have to agree to a swap of tenants. If agents are going to charge the landlords as they are now unable to charge the tenants, then will any landlord agree in the future?

The Agent may seek to appeal the decision of the First-Tier Tribunal and they may well have an argument to do so. Until such time agents and landlords need to be careful.

If you are looking to buy or sell a property, contact our Residential Property team who can discuss your options and guide you through the process.

If you would like any more information relating to this article or require assistance with possession matters, commercial or residential, then please feel free to contact me: Telephone – 020 8221 8032, via email: sebastian.jakubowski@bowlinglaw.co.uk or visit my profile.

This is not legal advice; it is intended to provide information of general interest about current legal issues.

Man Signing A Tenancy Agreement

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