Fee for changing tenants when renewing tenancy

Landlord Discussion Legal
1

Hi,

Our tenancy is about to expire. However, our landlord is happy for us to stay another year. One of the housmates under the current tenancy is moving out and being replaced by a new tenant after the current tenancy ends. The letting agency is trying to charge us an admin fee for “changing the terms of the tenancy”. However we think this isn’t allowed as we are not amending the tenancy, we are creating a new one?

Would appreciate some guidance here.

2

How much are they asking for?

3

Although it may seem a simple replacement of one tenant for another, legally it requires quite a lot of work. The recommended process is:

  1. Check-out inspection
  2. Refund of deposit less any deductions
  3. End current tenancy with a deed of surrender
  4. New tenant and remainers sign a new contract.
  5. All new prescribed documents are served
  6. A new inventory is produced and signed
  7. A new deposit is taken and protected.

Even if a deed of assignment is used instead, its still a fair bit of work. Therefore the agent is allowed to charge a fee not exceeding £50. If the landlord makes the charge, it can be for their costs.

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4

Whats your view on the below?

Neither the legislation nor the Government’s guidance give many clues about what level of fees is reasonable. The Act does not explain what is meant by reasonable costs, and the guidance states that “the general expectation is that this charge should not exceed £50” but “in some circumstances, it may be appropriate for this to be higher.”

Source: Anthony Gold solicitors

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The Tenant Fees Act distinguishes between in schedule 1 para 6, changes to a tenancy, (changes to people or terms) and in para 7 ending a tenancy early. In the former case, the amount is capped at £50. In the latter it is capped at the actual costs to either landlord or agent.

I’m aware of one test case, although County Court, so not binding, where the ruling was that the limit should be £50. I’m not aware of any other cases. Its possible that if an agent charges the landlord a larger fee when the tenant requests to end the tenancy early, it may be possible for the landlord to pass on that fee to the tenant. However, there is always the risk that the court/tribunal will limit it to £50.

If a tenant wants to replace themselves in a tenancy, then the recommended method is to end the tenancy and begin a new one. However, I am not sure that the court/tribunal would regard that as qualifying under para 7, but I think would be more likely to expect the landlord or agent to use assignment/novation to change the tenant and limit their fee accordingly.

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6

Thanks for your highly useful insight as ever David