Can an agent take money out of a deposit for unpaid renewal fees?

Can an agent take money out of a tenant’s security deposit for unpaid renewal fees?

The question, posed on Mumsnet, led to a variety of responses.

The questioner said that the tenant, her aunt, owed her agent a fee for renewal. The agent told her that “if she doesn’t pay they will just take it out of her security deposit at the end of the tenancy anyway. Is this right? I thought that the security deposit could only be used for unpaid rent or damage.”

Responses included: “No, legally they can’t take any of her deposit to cover fees”; and “Yes they can . . . if your aunt goes to TDS she will lose”; and “This renewal thing sounds like highway robbery to me.”

So, what is the answer? We went to two of the deposit schemes to find out.

A spokesperson for the Deposit Protection Service told us: “If a tenancy agreement states that a tenant is liable to pay a specific fee, then they must pay it, and the landlord can make a deduction from their deposit to cover it if they don’t.

“However, if the tenancy agreement states that the deposit can only be used to cover damages or unpaid rent – or if is there is no clause in the tenancy agreement that says the tenant is liable to pay the fee – the DPS adjudication team may not agree to the deduction if it is disputed by the tenant.”

Michael Hill from the Tenant Deposit Scheme said: “If we were presented with a claim for a renewal fee, we would be looking for the following:

“A clause within the tenancy agreement obligating the tenant to pay for tenancy renewals; a deposit use clause which specifies the deposit can be utilised for unpaid fees/costs; and evidence that the original tenancy reached an end and a renewal commenced.

“Presuming we were provided with these three items, and that the amount claimed was a reasonable cost, we would likely make an award from the deposit.

“As always, no two cases are the same and it will very much depend on the evidence provided.

“It’s important to note that this is our current stance as the tenant fee ban will likely impact on claims of this nature once it comes into effect.”

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6 Comments

  1. Woodentop

    Simple you can only enforce the terms of your contract. Pretty basic Lettings really.

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  2. Will

    So you just sue the tenant so they get a CCJ much more damaging than arguing with some third party.

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  3. Property Money Tree

    …but the landlord is responsible for returning the deposit, and if a dispute arises and the tenant wins, the landlord will have to make good what the agent has taken.  He might then have to sue the agent, and any which way, there will be a lawsuit.  So, as Woodentop said, they have to follow the contract

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  4. ringi

    Given there is no legal requirement for a tenant to ever renew a tenancy regardless of what an AST says, and the tenancy automatically continues,  I can see this could be an interesting case if it got to court.

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  5. HIT MAN

    As far as I can see if the tenant doesn’t pay the renewal fee, DON’T renew the tenancy. Simples…You could aways serve S21 and replace them.

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  6. PossessionFriendUK39

    That’s got to an Unfair term,  can’t ever see that being successful.

    Deposits are for legally specific purposes.  Yes, an AST  should include shortfalls in rent.   Pretty much no wonder the Govt are banning fees by agents to Tenats is it.  ?

    All these fee’s that Agents charge has ‘cooked their Goose’

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