Letting agents ‘still charging illegal fees’ in Scotland

Residential housing sale and letting signs are seen in Hastings in southern EnglandIllegal rent fees are still being charged by letting agents across Scotland, a BBC investigation has found.

The Scottish Government clarified rent laws in 2012, specifying that any fee beyond rent and a refundable deposit was illegal.

Shelter Scotland said around 1,500 people have tried to reclaim nearly £250,000 since the law was clarified.

The Scottish Government said they were working to introduce a robust framework for the regulation of letting agents.

Shelter Scotland started the Reclaim Your Fees campaign in May 2012.

Three months later, the Scottish Government decided existing legislation on rent laws was not clear enough about additional charges such as reference checks, credit checks and inventory fees.

Three years later, Shelter said it believed letting agents were still charging illegal fees.

After a long search, Emma (not her real name) finally found her ideal flat. Then, she said, her letting agent told her she had to pay extra fees in order to secure the property.

She told BBC Scotland she had to pay fees for a reference check for herself and her guarantor, at a cost of £55 each.

She said: “We also had to pay a deposit. And all of this was necessary for us getting the flat.”

Emma said that she was not presented with the choice of performing her own reference checks, and therefore avoiding the fee.

Emma was charged the fees after the law was clarified. She said she was aware the fees may have been illegal at the time - but she did not want to lose the flat.

BBC Scotland consulted solicitor Stephen Farrell, of Burness Paull, about Emma’s case.

He said: “If the tenant was not given an option and they had to pay this referencing fee in order to get the lease, then that would be an illegal premium.

“The second issue is the non-refundable holding deposit. Deposits are normally paid by tenants but they are to guarantee the obligations under the lease.

“But in this case the tenant is having to pay in order to get the lease in the first place. And if they don’t go ahead with it, the deposit is not returned.

“That technically under the law could be deemed an illegal premium.”

BBC Scotland approached the company who carried out Emma’s reference check for clarification over whether the company gave potential customers the choice to complete checks themselves.

It stated it makes “absolutely sure” that tenants in Scotland are always aware of the choice to perform their own checks, saying: “Whilst the legislation in Scotland is in our opinion regressive, we respect the law and operate within the legislative framework.”

It provided BBC Scotland with documents given to tenants who use their tenant referencing service which highlighted the possibility of this choice. However, these documents were different to ones Emma gave the BBC.

When the BBC asked the company to respond to this, it said it informed agents their clients were able to complete the referencing process independently and stated it is the agent’s responsibility to make sure the client is fully informed. It said without knowing the details of the case, it could not investigate further.

BBC Scotland then approached the letting agent, who said: “Any deposit taken by is used as a security deposit and is registered with a third party deposit scheme as per current legislation. We do not accept the allegations made by this case study that we have not suitably informed tenants.”

Emma’s case is not unique.

Liam King, president of the Students’ Representative Council at Glasgow University, told BBC Scotland they have seen nearly 50 cases relating to letting fees in the last year.

He said: “That’s only the tip of the iceberg, that’s only students that are coming to us.”

He believes students are a “a very easy target” for some letting agents, as many are not from Scotland and are unaware of Scottish rent law.

Director of Shelter Scotland, Graeme Brown, said letting agents were continuing to charge “illegal” fees.

He said: “This is only the cases that have come to our attention, and given the fact there are 312,000 people now in the private rented sector…we suspect this is a far bigger problem .”

David Cox, managing director of the Association of Residential Letting Agents (ARLA), said: “We are operating in a two-tier market at the moment…a small minority of agents are flouting the law, knowing that they’re not being properly enforced, and knowing they can probably get away with it.

“It’s why we’re urging the Scottish Government and Westminster to take a much greater regulatory approach to lettings agents. Scotland is already a long way down that line, but there’s still more work to do.”

The Scottish Government said: “We are currently working to…introduce a robust framework for the regulation of letting agents.”

A Crown Office spokesman said: “The Crown can only raise prosecutions if an accused is reported to us. Proceedings will be raised where there is a sufficiency of evidence in law and it is in the public interest to do so.”

A Police Scotland spokesman said it “will investigate and report to the procurator fiscal any complaint about criminal activity.”

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