Tenant Fee Refund Case: Tribunal Ruling

Fulwood Gardens Case Summary

In a recent decision by the First-tier Tribunal (Property Chamber), tenants have successfully argued for a refund of prohibited payments they were charged upon the premature termination of their assured shorthold tenancy. The tenants challenged charges imposed by Chase Buchanan Ltd., acting on behalf of their landlord client, regarding a rental property in Twickenham.

The Facts of the Case

The tenants entered a one-year assured shorthold tenancy agreement on the 2nd of December 2021, which was subsequently terminated early by mutual agreement. A Deed of Tenancy Surrender was signed and became operative on the 3rd of February 2022, with the tenants agreeing to pay compensation of £2,270. This amount covered losses due to the early termination, including rent shortfall, various fees for setting up a new tenancy, and inventory check-in and check-out fees.

The Tribunal's Findings

Under the Tenant Fees Act 2019, which aims to prevent landlords from charging excessive fees, the Tribunal assessed whether the amounts paid by the tenants were 'permitted payments'. Judge Edgington found that most fees were reasonable and within the permitted payments under the 2019 Act. However, the Tribunal determined that the letting agent's fee of £145.00 for an inventory check-out was unreasonable because the check-out and check-in for the new tenancy were carried out consecutively. Therefore, this fee did not meet the reasonableness criterion and was considered a prohibited payment that should be refunded to the tenants.

Key Takeaways for Landlords and Agents

• Rent Shortfall: The Tribunal upheld the charge for the rent shortfall, as the landlord re-let the property at a lesser rent and could claim only the actual loss incurred.
• Letting Agent’s Fees: Charges for setting up a new tenancy were deemed reasonable, related to tasks performed to mitigate the landlord's loss and secure a new tenant.
• Check-In and Check-Out Fees: Only one such fee is permissible when these services are conducted on consecutive days, as it is unreasonable to charge for both.

Conclusion

The Tribunal's decision serves as an essential reminder to landlords and letting agents of the need to comply with the Tenant Fees Act 2019 when calculating charges for the early termination of tenancies. In this case, the Tribunal has ordered the refund of the prohibited fee, highlighting the ongoing scrutiny of tenant fees.

Landlords and agents must ensure that fees charged for tenancy changes, including terminations, are justifiable and do not exceed reasonable costs. It is advisable to carefully assess all fees and ensure they align with the legislation to avoid future disputes and potential refunds.