NLA advice: charge and then refund for failed referencing

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    NLA advice: charge and then refund for failed referencing

    Just going through some docs in the NLA's online library and I came across this advice

    • Charge for the cost of referencing and refund an equivalent sum if the tenant is successful
    In other words, the NLA assumes that applicants are not actually tenants and that you're not breaking the law if you charge them a fee for referencing and they fail referencing. You then get around the law by refunding the applicant who then becomes your tenant.

    This seems dodgy advice to me because it does not seem to follow the spirit of the law. Any thoughts?

    #2
    Definitely against the spirit as the landlord gets to choose who does the referencing and can reference people he knows will fail just to get a cut of the referencing fees.

    Comment


      #3
      There isn't really such a thing as the "spirit" of the law in England and Wales.
      Everything is based on the words used.
      Where there's doubt, a judge or appeal court may try and work out what the intention of parliament was, but if the intention doesn't agree with what they actually passed as a law, the courts will follow what the statute says.

      However, that advice (if it's genuine) is poor.
      In the Tenant's Fees Act, '“tenant” includes—a person who proposes to be a tenant under a tenancy' so charging a fee a person while they're proposing to be a tenant is a prohibited payment.
      It doesn't matter if, at some point later, they cease to be someone who proposes to be a tenant, the prohibited payment has already been taken.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        What is the date of this advice?

        Comment


          #5
          Originally posted by leaseholder64 View Post
          Definitely against the spirit as the landlord gets to choose who does the referencing and can reference people he knows will fail just to get a cut of the referencing fees.
          Even if this was allowed and landlords were desperate enough to want a cut of such a pathetic scam, why on earth should they comply with the "spirit" of poor legislation?

          Comment


            #6
            I think we have now established that the loophole doesn't exist, but the reason for complying with the spirit is that they are good citizens, not just amoral money making machines.

            Comment


              #7
              Speak for yourself!
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


                #8
                I'd like to see the full context before deciding if it is a loophole, it may be referring to holding deposits and applicants giving false information.

                Second guessing the "spirit" of legislation doesn't make you a good citizen nor a good landlord.

                Comment


                  #9
                  sorry to open a can of worms by using the phrase "spirit of the law" - my mistake.

                  The advice is genuine (not sure why you'd think I'd post something that is not...). Here's the full context of the NLA page it's from:

                  Cost of referencing

                  The cost of referencing will vary depending on how it is carried out, how many checks are undertaken and whether a specialist referencing company or agent is used.

                  Many agents will pass on the cost to their client landlords (nb. it has been illegal to pass on these costs to prospective tenants since 1 June 2019). If this is the case it should be made clear that the fee is non refundable.

                  Most landlords do one of the following:
                  • Incorporate the cost into the rent without taking a fee or deposit
                  • Incorporate the cost into the rent and take a holding deposit
                  • Charge for the cost of referencing and refund an equivalent sum if the tenant is successful
                  For those who are NLA members, you can find the page here:

                  https://landlords.org.uk/library/ten...st-referencing

                  The fact that this page includes reference to the recent law change means that it was at least edited, if not drafted, in the last two months. But it seems to actually be advocating something illegal.

                  Comment


                    #10
                    Still ambiguous without seeing the full text.

                    Why not simply ask the NLA?

                    Comment


                      #11
                      Originally posted by boletus View Post
                      Still ambiguous without seeing the full text.
                      That is the full text of the page.

                      Comment


                        #12
                        I think someone has just made a mess of the editing.

                        But the third bullet point wouldn't be legal (unless I have really misunderstood the legislation).
                        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                        Comment


                          #13
                          Originally posted by boletus View Post
                          Why not simply ask the NLA?
                          Because they drafted what I suspect is erroneous content in material designed to qualify landlords as accredited, I decided to ask here first. It's interesting that no one here can say for sure either way.

                          I'll ask them and report back with any response.

                          Comment


                            #14
                            So, after initially being fobbed off with "we continually update our materials" and "please read our documentation on the Tenant Fees Act" I asked them point blank if what they were advising in the quote above was illegal or not and had this response:

                            The law is clear that landlords cannot charge for referencing.

                            I can confirm that we are constantly reviewing the drafting of the content and on this occasion we will redraft that last point to offer greater clarity, because of what it implies about the landlord’s ability to charge for referencing.

                            However, a landlord would be entitled to reclaim the costs of a referencing check if they take a holding deposit and a tenant provides false or misleading information that results in a failed reference check.
                            Boletus' assumption was right but the way they worded it certainly did not make this clear.

                            Comment


                              #15
                              Why don't people just say, you're right, that doesn't say what we intended, thanks?
                              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                              Comment

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