The recent change in the law has been prompted by a campaign, spearheaded by Shelter Scotland, which claims to have uncovered numerous instances of unscrupulous letting agents charging substantial additional fees to tenants.
The Scottish Government, while keen to make it clear that the vast majority of letting agents in Scotland carry on their business in a professional manner and do not take advantage of the lack of clarity in the current law to charge unfair fees to tenants, has gone one step further to clarify that it is, and indeed always has been, illegal for letting agents to charge administration fees to private tenants.
While clarification of the law will be welcomed by tenants it may cause difficulties for letting agents and private landlords, many of whom may be unaware that they may have been doing anything wrong.
The change in the law will make it an offence for letting agents to charge tenants for anything other than rent and a refundable deposit of no more than 2 months’ rent. Charging finders’ fees, sign up fees, referencing and credit check fees, and for the preparation of inventories and holding deposits, will be illegal.
Letting agents who fall foul of the law by continuing to charge tenants could be faced with a fine of up to £1,000 for each incidence.
The consultation carried out by the Scottish Government not only made it clear that additional tenant charges will be illegal in future but also confirmed that, despite the apparent lack of clarity in the current law, such charges have always been illegal.
Shelter Scotland welcomed the news and has set up a new website called www.reclaimyourfees.com to encourage tenants to use the step by step process to reclaim fees which have been charged to them in the past.
Claire Haig, associate with Miller Hendry in Perth commented:
“This will undoubtedly have an impact on the business of many letting agents who may have been operating under the assumption that those costs were legitimate and acceptable. It is now critical that letting agents are both aware of the developments in the law and that they amend current business practices in order to avoid committing an offence.
For those who may have charged these fees in the past, they may also need to prepare adequately for backdated claims which have been applied incorrectly over the past five years.”