Thursday 25 February 2010

£2m fleeced from Scottish tenants in unlawful premiums each year

GLC has settled an action for the return of an unlawful tenancy premium, charged to a Glasgow private sector tenant to cover the cost of a credit reference check and the letting agents' administrative costs. The company, one of the biggest estate agents in Scotland, refunded the £235 premium in full, with court costs, without conceding liability.

Estate and letting agents in Scotland regularly require the payment of such charges before they let properties to tenants in the private rented sector. Yet, any charge in addition to rent (or a lawful deposit) is an unlawful 'premium' under Scots law, punishable by a statutory fine on a successful prosecution, and liable to be refunded to the tenant. The relevant law is set out here.

GLC's Mike Dailly said:
"Based on Scottish Government research, Govan Law Centre estimates that tenants in the private rented sector in Scotland could be getting fleeced by £2m or more per annum by estate and letting agents. That equates to around £200 per tenant under the guise of 'administration charges' and/or 'credit reference checks'."

"We believe Scots law is quite clear here. Any charge which is a requirement to obtaining a tenancy is a premium unless it is for rent or a lawful deposit. Premiums charged to tenants may constitute a statutory criminal offence, and the law entitles tenants to seek a full refund of such charges".

"The harsh reality is that many tenants who are being asked to pay these unlawful fees are financially vulnerable and desperate to get a roof over their family's head. This is why GLC is launching a national awareness campaign on this issue, and is providing the online legal know-how to empower tenants and their advisors to secure a refund."

An example Small Claims Statement of Claim is here.

Guidance on raising a Small Claims action in the Sheriff Court is here.
Note on how we calculate our £2m estimate:
The Scottish Government's review of the private rented sector "found that Scottish landlords may be wrongly withholding between £2.2 million and £3.6 million worth of deposits per year, from between 8,000 and 11,000 tenants". Taking 11,000 tenants being charged around £200 in administrative costs, the cost of inventories, credit reference checks, and such like, gives a figure of £2.2m per annum in Scotland.

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