The Association of Residential Lettings Agents has taken legal advice on what can be charged to tenants for so-called ‘contractual damages’.
ARLA says it’s been contacted by many members with queries about whether these charges can be levied on tenants given the Fees Ban.
The answer is not contained within the Government Guidance issued earlier in the year and therefore ARLA has sought Counsel’s Opinion.
A statement from ARLA, passed to Letting Agent Today last evening, says the question was: "When a tenant has caused damage which has required the landlord to remedy the issues (such as blocking a toilet by flushing nappies down it) and the landlord instructs their agent to arrange the works, can the landlord pass on the agents’ commission as well as the actual costs of the repair."
ARLA says that in the opinion of a barrister, Erol Topal - a respected authority in housing law - such a charge will be against the spirit of the legislation but may be possible if there is a clause in the AST making this clear to the tenant when they 'enter the agreement'.
ARLA continues: “However, such a clause may be subject to challenge under consumer protection legislation and, if successful, would be deemed an unfair term which could result in the agent having the clause struck out by a court (and this not being able to recover anything) and be liable for a penalty under the Tenant Fees Act 2019.
“Therefore, whilst agents must make their own commercial decisions on how to take this issue forward, ARLA Propertymark is NOT recommending this course of action and as such will NOT be making any changes to its ASTs.”
You can see the 19 page legal opinion here.
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Very misleading headline. So agents CAN pass the cost of the repairs. They can NOT pass on the commission/cost of the agent's time. I thought we pretty much knew that already.
Commission and costs for time for arranging are different things and this article confuses the two. See my response below.
If you are adding a commission to the trades repair bill, it'd now be prudent to deduct a commission from the overall repair bill. Problem solved.
So your contractor now has the problem of declaring an invoice to the taxman that they haven't been paid fully for. Pull the ladder up Jack, I'm alright!
Each set of management terms will be different – even, possibly, within one agency. The basic charge *may* only include the collecting of rent and producing a monthly statement, for example. In any case, commission and costs [of arranging the work] are two subtly different things. Ultimately, *if* the agreement between the agent and the landlord does indeed make provision for the charging of costs of arranging works, this then forms a part of the overall total for the cost of the repair and, as such, the landlord should be allowed to recover this from the tenant. You and Counsel have made an assumption that all management agreements include the arranging of work.
ARLA has been contacted by many members on is it OK charging secret commissions? No wonder legislation was needed to regulate!
Trust not Tricks. If the agent is too tricky dump him. Simple rules apply if they complicate it ditch them.
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