Scottish Government to consult on unfair rental charges

5 April 2012

The Scottish Government is to consult on whether to outlaw charges that are often made by letting agencies to tenants and prospective tenants. The move comes from a growing awareness of unscrupulous agencies that are making additional charges to tenants, often in the form of administration fees. There is existing law that prohibits the charging of ‘premiums’ over and above rent and deposits – but there can be confusion over exactly what could constitute a premium. Letting agencies will often make charges for preparing paperwork such as the tenancy agreement, ‘holding deposits’ to secure a property, and running credit checks. The law is unclear as to whether these charges are lawful, and whilst it may be justified for an agency to recoup outlays on things like credit checks, many agencies are making a profit on such activities. Each agency will be different and to an extent it is up to the prospective tenant as to whether they are willing to pay the charges.  However, agencies should not request any money before they have found a tenant a property, nor should they charge a prospective tenant to be provided with a list of accommodation.

The current law is set out in the Rent (Scotland) Act 1984, in section 82. This states that anyone charging premiums as a condition of the grant, renewal or continuance of a protected tenancy, in addition to the rent, is guilty of an offence. This would appear to exclude any form of charge. The Private Rented Housing (Scotland) Act 2011 enables regulations to clarify exactly what is prohibited in making a premium charge.
The problem is particularly acute at a time of economic strain for many who find themselves having to find cheap rented accommodation in the private rented sector. The extra charges could be potentially prohibitive for those who are already struggling to find the money for a deposit. A study undertaken by Shelter Scotland at the end of last year found that of 29 letting agencies investigated, 90% were making such charges.
The Scottish Government has taken further steps to protect tenants in the private rented sector by approving the Letting Protection Service Scotland, which aims to help tenants who find themselves in the situation of having their deposits wrongly withheld. The service is an approved scheme under the Tenancy Deposit Schemes (Scotland) Regulations 2011, where landlords lodge deposit money with the scheme and must provide tenants with information about the scheme.


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