Confusion among renters over the complex Tenant Fees Act could trigger a surge in complaints about agents to redress schemes - and some of them could be wrong.
That’s the warning from PropTech supplier PayProp, which provides automated payment technology to the letters sector.
From June 1 the Act, already partially enacted, will extend to cover all tenancies, irrespective of when they were signed. That means any tenancy clauses that contain checkout fees are unenforceable and agents that charge them could be breaking the law.
However, there could also be confusion over deposits according to PayProp.
While new or renewed tenancies are unable to hold deposits over the five or six week limit, agents will not have to refund the difference unless the tenancy renews. Those tenants who remain on contractual periodic tenancies will continue with the same insured/custodial deposit which will not need to be adjusted by or after June 1 2020.
"There is likely to be confusion among tenants over the next few months. Until June 1, active tenancies are still subject to the old rules until their tenancy renews or the legislation is extended" says Neil Cobbold, chief sales officer of PayProp.
"This confusion could lead to consumers wrongly complaining to the redress schemes about agencies which are, in fact, acting lawfully."
"However, now is the right time for landlords and letting agencies to make sure they have all their processes in place to ensure they are not overcharging renters and that they remain compliant with the Act" he says.
Media reports suggest that the approved redress services – Property Redress Scheme and The Property Ombudsman - had already received well over 200 complaints from consumers alleging agents had tried to charge them illegal fees.
Cobbold says that some of these complaints could have come from tenants who didn't understand why their deposit was still above the deposit cap or why they were still being charged certain fees.
"There is no indication of how many of these complaints were upheld by the redress schemes…however, under 250 complaints is a relatively small number when one considers that the PRS and TPO represent thousands of letting agencies across England.”
Cobbold is calling on agents to continue to work until June 1 on explaining to tenants how the legislation works to avoid inappropriate complaints.
"This could save time, protect relationships and allow agencies to focus on other important parts of their business. There is no excuse for agencies or landlords to be charging illegal fees or holding deposits on new and renewed tenancies that are above the cap, leaving themselves open to reputational damage or potential fines" Cobbold concludes.
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Is it really that complex? No fees for anyone after 1st June. A new tenancy is subject to deposit limits. An old/ periodic tenancy isn't. Agents do not have to refund if there is a difference between 5 weeks and deposit held. Seems really complex to me!!
It shouldn't be for people in the industry who understand the different types of tenancy, so I don't see why any agents would get it wrong. All they need to remember is it's 5 weeks on every tenancy from 1st June 2020 fixed term renewals included. The only exceptions will then be periodic tenancies that commenced as a fixed term before 1st June 2019.
Most tenants however will only see the word tenancy and won't understand the difference, so it would be prudent for agents at least to send out a note in plain english with their scheme guidelines so they can't say they havent at least been provided with the information. Likewise, with any historic longer fixed term tenancies that now lapse into a periodic, it's an ideal time to have that conversation.
Equally though I know some agents that are going to the other extreme and are planning to refund 1 week on every existing tenancy, even periodics which they have to be careful about. Unless they have consent the deposit needs to remain at the amount agreed in the original TA, as their is no obligation to make any changes.
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