Rip-off letting agents on the back foot after court ruling

The ruling of a Sheriff in Aberdeen against a letting agency is just the latest victory for the emerging tenants' union movement in Scotland.

Jon Black
25 February 2014

Tenants in Scotland have recently won an important legal action against illegal letting agency fees charged before the Scottish Government issued a clarification of the law against such fees in 2012. It may not sounds like it, but this decision is an important victory for Scottish tenants. We might be able to claim back 'historical' charges in the hundreds of thousands of pounds. This verdict follows a lengthy, and ongoing, campaign by groups such as Edinburgh Private Tenants Action Group, to stamp out illegal fees.

The illegal fees campaign

In Scotland, letting agency fees are for vague things like 'administration', checking your references and your credit history. These kinds of fees have been illegal in Scotland since 1984, however, agencies have been routinely breaking the law since then, and charging 'administration' fees from around £60 to £200 before tenants can rent a flat. The total amount of illegally charged fees between 2007 and 2012 had been estimated at £125m.

At a public meeting on criminal landlords in Edinburgh, one of the big issues that came up in the discussions was that everyone had been charged these fees when they started their tenancies. So we launched a campaign to inform tenants that they were illegal, and could claim them back, and began putting pressure letting agents into stopping charging them using direct action.

Our campaign initially involved creating a guide to how to claim them back, and protests outside several of of the worst offenders. We did a 'mystery shopping' exercise where we phoned round about 60 letting agents in Edinburgh to find out how many of them charged illegal fees, and how much. All of which gained significant media coverage to raise awareness of the the issue. We helped tenants claim back their illegal fees, and we estimate we have helped dozens of tenants get back thousands of pounds in fees to date, with more in the pipeline.

Just after our activity started, the Scottish Government began a consultation on illegal fees, with the intention of clarifying the law, and potentially legalising them. We publicised this consultation, with street stalls, social media, gathering signatures for petitions and writing letters to ministers. We helped make sure tenants' views were well represented. Thankfully due to the efforts of our members and housing charities we made sure the law was clarified in tenants' favour. The majority of letting agencies have since stopped charging fees, and this is saving tenants hundreds of thousands of pounds every year.

Letting agencies have, however, been arguing that administration fees were legal before the clarification, and that it was only fees charged after that date were prohibited. So, many letting agencies are refusing to refund pre-2012 fees. EPTAG is currently supporting a dozen tenants, trying to claim back pre-2012 illegal fees. So, there is still lots of work to be done, and this is why this recent court victory in Aberdeen is so important.

The Court Decision

In 2009 Aberdeen Property Leasing had charged the tenants an administration fee of £125, in addition to the rent and deposit. The tenants, who were representing themselves, argued that the 1984 Rent Scotland Act clearly states that it is illegal for a landlord or letting agent to charge tenants any fees in addition to their rent and deposit, and therefore such fees were illegal even before the clarification. The Sheriff agreed with them. This judgement may mean that letting agents in Scotland can no longer rely on this excuse.

In the judgement, Sheriff Lewis stated: “In my opinion the definition was not changed – it was improved to make it crystal clear to all involved in residential leasing that administration fees ought not to have been imposed and ought not to be imposed.

“I have concluded that the administration fee imposed by the defender was a prohibited payment and accordingly the pursuers are entitled to the return of it. ”

While decisions in a Sheriff Court do not create legal precedents, this ruling should give confidence to tenants who have yet to claim back their illegal fees, even ones that were charged several years ago.

This is an important decision for tenants who have yet to claim back their illegal fees, and also for a dozen members of EPTAG who are collectively claiming back pre-2012 fees from their letting agency.

We need tenants unions

EPTAG is a small organisation, that certainly punches above its weight, but what the illegal fees campaign makes clear to us, is that tenants need to be better organised. When EPTAG started there were very few private tenants organisations. There has been some encouraging growth over the last couple of years with several groups starting up in the south of England, and another group in Glasgow affiliated to our one. The National Private Tenants Organisation (NPTO) in England has recently been set up, and here in Scotland we are initiating a national tenants union this year.

However, despite this growth we are still disorganised and badly funded compared to landlords organisations, who have a much stronger, better funded, and well coordinated voice on housing issues. With a third of British MPs buy-to-let landlords, the only way we will get the changes we need is to build power for tenants. That means creating big national tenants unions, that can fight against the entrenched interests of landlords in society. I would encourage any private tenant to get in touch with us, or the NPTO, and become part of the UK's private tenants movement.

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