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Upfront "agency Fees"

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I applied for tenancy of a rental property through an apparently well-established and reputable letting agency in Bristol.

I paid them a £388 "agency fee" upfront and was told face-to-face, in the agency office, in front of a witness, that in the event of the tenancy not proceeding this fee would be refunded. No conditions were specified at the time on this refund offer and I assumed that it applied in all circumstances, should the tenancy not proceed for whatever reason.

The tenancy then in fact did not proceed due to (according to the agent) the references not working out.

I am now told that:

1) The reason for the reference failure is confidential and I have no access to it, no way of checking it.

2) The £388 is in fact not now refundable because the tenancy application failed because of the references.

Questions:

Is the letting agency within its rights? Can I get my £388 back or not?

What is to stop an agency taking multiple upfront agency fees from would-be tenants in this manner, and then keeping all these fees, supposedly for the above reasons? Is it a scam?

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All theletting agencys take an up front fee and as far as i know its not refundable unless the LL pulls out for circumstances outside my control. If i failed the refferences or pulled out then i loose it. Thats how it was explained but they have to give a reason. If its your refference find out which agency did it and ask them why. If it is a scam go to the office of fair trading once you have all the infomation.

Good luck

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I agree with the above, that if the agency has gone through the process of checking references etc then they have done what you have paid them for..... however as far as seeing the references is concerned, under the data protection act you are allowed to see anything written about you including references. Check with the information commissioners website for exact details, but this may give you some clout to phone them back with and ask again.... Good luck :)

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tenant 447. The two posters above are mistaken. Agents often try to hold on to the "admin fee" or holding deposit but it's totally illegal:

See this OFT doc on unfair tenancy terms:

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

In particular: page 92: supplier's right to cancel without refund:

"Withholding refund

Unfair term:

The tenancy application fee is non-refundable. If you or any of the prospective tenants are rejected by the referencing agency and the tenancy does not go ahead as a result, the above payment will not be refunded.o the

Way of revising term:

Term deleted."

Write a letter to the Agent demanding immediate repayment or you'll take them to the small claims court. Mention the 2005 OFT ruling and they'll know they haven't got a leg to stand on....

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tenant 447. The two posters above are mistaken. Agents often try to hold on to the "admin fee" or holding deposit but it's totally illegal:

See this OFT doc on unfair tenancy terms:

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

In particular: page 92: supplier's right to cancel without refund:

"Withholding refund

Unfair term:

The tenancy application fee is non-refundable. If you or any of the prospective tenants are rejected by the referencing agency and the tenancy does not go ahead as a result, the above payment will not be refunded.o the

Way of revising term:

Term deleted."

Write a letter to the Agent demanding immediate repayment or you'll take them to the small claims court. Mention the 2005 OFT ruling and they'll know they haven't got a leg to stand on....

Thanks, gadget.

I've printed the relevant page, noted the reference, and I will be at their office tomorrow morning. :)

No-one can prevail against the HPC gang.

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Well good luck and tell us how it goes.

Though i personally wouldn't go the route of confronting them in person. The random agent you speak to probably won't know anything and insisit their contract is all above board and that would just rile me up.

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I agree with the above, that if the agency has gone through the process of checking references etc then they have done what you have paid them for..... however as far as seeing the references is concerned, under the data protection act you are allowed to see anything written about you including references. Check with the information commissioners website for exact details, but this may give you some clout to phone them back with and ask again.... Good luck :)

I believe you want to make a 'Subject Access Request' under the Data Protection Act. Do it regardless of the outcome as it's a pain for them.

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I have checked the "Referencing Fee Agreement and Receipt" that I signed in the agents' office and it states:

The Tenancy is subject to satisfactory references being obtained.

If satisfactory references are not obtaineed, the Administration Fee will not be refunded.

Have I been a mug and signed away my legal rights, or is the contract invalid because, in general, illegal contracts cannot be enforced? (e.g. if someone signs a contract to rob a bank, that contract cannot be enforced.)

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It doesn't state what "satisfactory references are" there or who will make the decision.

Therefore it's not worth the paper it's written on. I have always challenged this as it could mean anything. The LL or the agent could decide for a perfectly arbitrary reason that I wasn't suitable and try and take my money.

In similar circumstances I wrote to them (registered letter) and asked for my money back within 14 days.

Then wrote again to say that I would take them to the small claims court and gave them 7 days to pay up and pointing out the fees involved.

They did.

Edited by Flopsy

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tenant 447.

An AST is a consumer contract and there are laws against unfair terms in consumer contracts. The OFT ruling in 2005 went through a whole range of AST terms that it considered unfair including the one you signed.

An unfair term is un-enforcable and by law they must give you your money back. You can't sign away your statuory rights, and a full refund if the supplier pulls out is one of them.

Write them a letter demanding your money back as they were the ones who decided not to proceed with the tenancy. State the the term in their contract was specifically ruled as unfair by the OFT back in 2005. Tell them if you don't recieve your money in 7 (or 14) days you will be taking the matter to the small claims court.

It's easy to make a claim in the Small Claims Court and they will have to re-imburse you for all costs after they lose (which they will)

Agents like this simply rely on the fact that 95% of tenants don't know their rights and get bamboozled and give up... They need to be put in their place.

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I've just spent some time going through this recently, as my letting agent was trying to extort £85 for the privilege of him not having to re-advertise after my 12 month AST expired.

There was nothing in the contract specifing any fees, so none were due.

The Unfair Terms in Tenancy Agreements 2005 is guidance only - not law. From what limited research I have done the letting agent does not have to abide by this.

The other two OFT powers are;

The Unfair Terms in Consumer Contracts Regulations 1999.

The Unfair Contract Terms Act 1977 which is an Act of Parliament , therefore law.

I would contact your local Trading Standards and Citizans Advice, they may be able to add some weight to your arguement without resorting to court.

Be firm with them, it worked for me.

The parasitic industry is in urgent need of regulation. Blame Mr Shapps..

BBC News

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An "unfair" term in a consumer contract is not legal or enforcable. The OFT have given guidance on what they consider to be unfair terms in tenancys but yes a judge will decide for themsleves if the actual term is unfair or not.

The odds of a judge considering it fair for an agent to keep £388 because they don't like your references are vanishingly small. Go to the small claims court and see (i doubt it will get that far, the agent will likely give you back the money when they see you are serious)

But it's probably a good idea to dob them in to Trading Standards. They'll most probably not do anything but it'll be recorded and if a few more people do it they may actaully be some action....

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Well, the tenancy is now going ahead! :)

After querying the £388 agency fee as suggested on this thread I was informed a couple of days later by the letting agents that the references had now in fact checked out OK and that my tenancy application had been accepted.

Not wanting to cut off my nose to spite my face I signed up, since the property itself is an ideal rental for me for the next two or three years.

As it's an attractive property at a fair price, I can assume that there was no shortage of potential tenants, so were they trying to brush me off to get further applications and further fees? Was my assertive attitude instrumental in the agency's change of mind? I'll never know.

Thanks to all who have advised me on this thread, the knowledge imparted gave me a sense of being far more in control of the process, and I'm sure it contributed to the positive outcome.

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As it's an attractive property at a fair price, I can assume that there was no shortage of potential tenants, so were they trying to brush me off to get further applications and further fees? Was my assertive attitude instrumental in the agency's change of mind? I'll never know.

It could just be that they're gel-haired ******wits.

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Well glad you now have somewhere to live which is the main thing i suppose.

Though you'll have to be on your guard as the agents have pretty much shown themseleves to be slimeballs....

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Well, the tenancy is now going ahead! :)

After querying the £388 agency fee as suggested on this thread I was informed a couple of days later by the letting agents that the references had now in fact checked out OK and that my tenancy application had been accepted.

Not wanting to cut off my nose to spite my face I signed up, since the property itself is an ideal rental for me for the next two or three years.

As it's an attractive property at a fair price, I can assume that there was no shortage of potential tenants, so were they trying to brush me off to get further applications and further fees? Was my assertive attitude instrumental in the agency's change of mind? I'll never know.

Thanks to all who have advised me on this thread, the knowledge imparted gave me a sense of being far more in control of the process, and I'm sure it contributed to the positive outcome.

I've known many agents try this routine and it is simply because they have either taken 2 tenants references at the same time and given the landlord a choice of tenant and want to keep all fees. No doubt they had others lined up and thought they might get away with double referencing fees. I bet they never even put you through referencing.

If somebody fails our referencing, then we do what we can to get them through whether it be by gaining guarantors or increased deposit or extra advanced rents. If we are unable to get them through the referencing then we will try to find them an alternative property where the landlord is willing to take a chance with the tenants.

If that fails, then we refund the referencing fee less any costs that we have incurred to the sub-contracting referencing company because that is part of the fee and the rest is our time spent although we are happy to not charge that part of the fee if we can't successfully get them in a property.

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I've known many agents try this routine and it is simply because they have either taken 2 tenants references at the same time and given the landlord a choice of tenant and want to keep all fees. No doubt they had others lined up and thought they might get away with double referencing fees. I bet they never even put you through referencing.

Funny you should say that because my guarentor's accountants, whose details were given to the agents on the forms completed by the guarentor, had not even been contacted at the time that the tenancy application was refused. When this was pointed out to the agents, they said that the 'failed' references were either mine or my partner's (they would not say which) and that there was no need to bother checking out the guarentor. Only after I started to challenge the agents with my new knowledge were the guarentor's accountants contacted.

There is clearly potential for a very lucrative scam here. I can imagine that, for a particularly attractive rental property, several lots of agency fees might be taken and retained on the 'failed references' pretext. I imagine that most applicants would feel that they had no grounds for redress.

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I wonder if there'd be any mileage in taking this case to your local Trading Standards? This has something of a smell of a scam, even full-blown Fraud.

Or failing that, to the meeja for a juicy scam story that might unearth some more victims with whom you could collectively take action, and convince TPTB it's not just you ....

I speak from ignorance here, but maybe those in the property or legal businesses might have some thoughts?

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I have seen many letting agents open up, take on lots of properties by offering low fees, then closing down 6 months later yet the bonds are missing and many of the first rents collected for the landlords have gone too.

I don't know how they get away with it. Probably because the industry is not regulated.

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I wonder if there'd be any mileage in taking this case to your local Trading Standards? This has something of a smell of a scam, even full-blown Fraud.

Or failing that, to the meeja for a juicy scam story that might unearth some more victims with whom you could collectively take action, and convince TPTB it's not just you ....

I speak from ignorance here, but maybe those in the property or legal businesses might have some thoughts?

I agree, it sounds from what you have said that the agents had not checked any references when your application was rejected. This is fraud. As a TSO I would be interested if a consumer reported the matter at my local office, not least to offer guidance on their illegal attempt to not refund the agent fees.

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