Rent warning over fees

editorial image

A KIRKCALDY letting agency says rents are likely to rise after the Scottish Government confirmed tenants should not be charged a range of additional fees.

Housing minister Keith Brown intends to clarify legislation under the Rent (Scotland Act) 1984 so that other than rent and a refundable deposit, all tenant charges will be deemed illegal.

But Martin & Co, which has an office in the town’s St Clair Street, claims the banning of fees – such as those for reference and credit checks – will simply mean the costs will be added to tenants’ rents instead.

Mr Brown said: “The majority of letting agents operate in a thoroughly professional manner.

“However, numerous cases of tenants across the country being ripped off were uncovered by Shelter Scotland. As a result of this consultation, we will make it crystal clear to tenants, landlords and their agents that all premium fees, over and above rent and a deposit, are unlawful.”

Ian Wilson, managing director of Martin & Co, said around seven per cent of the revenue collected by his business came from the fees which are being banned.

He said agents would still carry out credit and reference checks, but instead of charging the tenants, the costs would be passed on to landlords, who are likely to recover their overheads by increasing rents.

“We reckon a five per cent across the board rent increase would recover the lost income for landlords, working on the basis agents pass on 100 per cent of the cost increase,” said Mr Wilson.

“The beneficiaries will be tenants who are new to the market or who move home a lot. The losers will be long term renters who are ‘sitting ducks’ for rent increases.

“It would be a rough justice if the benefits bill rises for the Scottish Parliament due to increasing rents to compensate landlords and agents for lost cost contributions from tenants.”

Housing charity Shelter Scotland, which pushed for clarity of the legislation, has launched a step-by-step toolkit on the website to assist tenants to make claims against letting agents, but Mr Wilson believed this would not be possible as the new definition would have to be applied retrospectively, and such a move would be unfair.

However, Gordon MacRae, head of communications and policy at Shelter Scotland said: “This is great news for everyone who has been ripped-off by unscrupulous letting agents. It will finally put an end to this unlawful practice and ensure enants are no longer exploited.”

Gerry McDougall, National Landlords Association representative for Fife, said landlords and tenants should be able to expect certain provisions when using a letting agency.

She added: “It is essential landlords and tenants alike are aware that additional fees above and beyond the rent and deposit are illegal.”