L charges admin. fee to avoid deposit protection

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  • L charges admin. fee to avoid deposit protection

    Please excuse me if this has already been discussed and i've missed it...

    There is a growing number of landlords in this area taking 'admin fees' to avoid TDP schemes and leaving behind the 'why bother' it's concerning that the deposit protection could be making thigs worse for tenants.

    The 'admin fees' taken are anywhere from 300 - 600 and non returnable. There was, i'm told, a local solicitor who challenged a landlord about this in one case and it was ruled in the landlords favour in court as the tenant 'did not have to accept these charges and could have gone elsewhere' and the DJudge expressed concern that the contents of the fee could not be broken down but there was no case for it being a deposit as it was non returnable.

    Is this correct and if so has the new laws actually made in worse for tenantts in some cases??
    Always double check advice... not just mine!

  • #2
    Nothing prohibits L and T from agreeing what they like in Tenancy Agreement. See definition of 'deposit' below [s.212(8) of Housing Act 2004].

    "tenancy deposit, in relation to a[n assured] shorthold tenancy, means any money intended to be held (by the landlord or otherwise) as security for:
    (a) the performance of any obligations of the tenant, or
    (b) the discharge of any liability of his,

    arising under or in connection with the tenancy.

    So anything not "as security" is not a deposit.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

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    • #3
      So as it's not being returned it doesn't count. I can understand the reasoning and have no doubt your correct!

      I'm concerned this will spread, become the norm, and put tenants in a worse financial position than previously as it will be as if every deposit is not returned. (although it's not technically a deposit!)

      Doom and Gloom
      Always double check advice... not just mine!

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      • #4
        I think we need to know the full facts and what was pleaded before we can decide whether the learned judge "erred in the law".

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        • #5
          I would like to know in which court this was held as it's an important case.
          The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

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          • #6
            I don't have the full details of the case as i wasn't directly involved. Was told the outcome more than the story which was that it was held a fee paid at the beginning of the tenancy to set it up which was non returnable could not be held as a deposit. It was held in 'Greater Grimsby County Court'.

            There is apparently also a case ongoing in the same court against a landlord who took either 4 or 6 months rent in advance. Think it a little more invoved than just that! The solicitor saying it was being held 'as security' so i'm waiting to see what the outcome of that one is too.
            Always double check advice... not just mine!

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            • #7
              Originally posted by Impartial Advice View Post
              I don't have the full details of the case as i wasn't directly involved. Was told the outcome more than the story which was that it was held a fee paid at the beginning of the tenancy to set it up which was non returnable could not be held as a deposit. It was held in 'Greater Grimsby County Court'.

              There is apparently also a case ongoing in the same court against a landlord who took either 4 or 6 months rent in advance. Think it a little more invoved than just that! The solicitor saying it was being held 'as security' so i'm waiting to see what the outcome of that one is too.

              Paying six, or even twelve months' rent in advance is the only way some international students are able to secure accommodation without having a UK guarantor, so that's not a new development.

              The sky-high admin fees, I suspect, will just not stand up to market forces. It's a dog-eat-dog world out there among the agents and unless every landlord uses an agent who charged a ludicrously high 'admin' fee, tenants will desert the 'sharks' for LLs who let their properties out privately without using an agent, or for those wiser agents who have stuck with a 'reasonable' admin fee. Tenants are not stupid. They don't particularly like parting with £300 as a deposit even when they know they will get it back. They will be even less willing to throw the same amount into an agent's bank account with no prospect of seeing it again.


              No-brainer
              'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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              • #8
                Originally posted by mind the gap View Post
                The sky-high admin fees, I suspect, will just not stand up to market forces. It's a dog-eat-dog world out there among the agents and unless every landlord uses an agent who charged a ludicrously high 'admin' fee, tenants will desert the 'sharks' for LLs who let their properties out privately without using an agent, or for those wiser agents who have stuck with a 'reasonable' admin fee. Tenants are not stupid. They don't particularly like parting with £300 as a deposit even when they know they will get it back. They will be even less willing to throw the same amount into an agent's bank account with no prospect of seeing it again.


                No-brainer

                I would agree it should work like that except there are, unfortunately, a whole bunch of uneducated tenants out there! and it appears the most vunerable are the ones that end up with these problems. in this area there is no shortage of housing but horrible shortage of landlord s willing to let to LHA tenants... not that thats suprising with the stupid rules
                Always double check advice... not just mine!

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