The Scottish Government is clarifying the law on tenancy fees, and has launched its “Consultation on the Charging of Premiums in the Private Rented Sector”. They are currently illegal, however some fees may actually end up being legalised following this consultation, so swift action is needed.
Section 32 of the Private Rented Housing (Scotland) Act 2011 which covers these charges will come into force this summer, but before it does, the government is consulting tenants, tenants organisations, private sector landlords, and letting agencies on the practice of charging tenancy fees, or “premiums” as they are called in the Act.
Tenancy fees are currently illegal under the Rents (Scotland) Act 1984. However, the vast majority of letting agents have been charging illegal and often extortionate fees to their tenants for things like reference checks, for drawing up inventories, and for credit checks. Letting agents have argued that the Act is not clear, and the fees they charge are not illegal premiums as defined in the 1984 Act.
The 2011 Act will clarify the law regarding illegal premiums. It has amended the definition in section 90 of the Rents (Scotland) Act 1984, so that “premium” refers to any fine, sum or pecuniary consideration other than rent or refundable deposit, not exceeding two months rent, and including any service or administration fee or charge.
This is a welcome clarification, however, the Act also makes provision to give Scottish Ministers the power to create secondary regulation which could determine the types of fees or charges that could be allowed, in connection with the grant, renewal or continuance of a tenancy. Effectively this Act could legalise some types of tenancy fees, which would be a big step backwards for private tenants rights.
The consultation seeks views on three options, asking respondents which they prefer, and their justification. These options are: (1) no fees; (2) some categories of fees would be allowed, but with maximum allowable amounts set for each fee; (3) some categories of fees would be allowed, with no maximum amounts defined.
Edinburgh Private Tenants Action Group maintains that all tenancy fees are illegal, and will be campaigning for them to stay that way. Times are hard enough for private tenants, and the last thing they need are these unjust and excessive fees to be legalised.
Individual tenants and relevant organisations can take part in this consultation, which ends on the 28th of May. We urge as many groups and individuals as possible to get their responses in, to make sure we keep tenancy fees illegal.