Letting agent renewal fees for tenancy agreements historically have never been popular with tenants or landlords particularly since some less reputable agents in the lettings industry will charge a fee to both the tenant and the landlord.
Letting agent renewal fees are illegal in Scotland
It is illegal for letting agents to charge renewal fees in Scotland and pressure is being placed on the Government by groups such as Shelter to apply the same law in England.
At the beginning of a tenancy it is usual for letting agents to charge a fee for obtaining references for a prospective tenant but once the tenant is in occupation it is not necessary or likely that they will seek further references hence the fee could be considered unfair. Renewal fees are not charged by good letting agents however, what can you do if your letting agent wants to charge a fee for the renewal of your tenancy agreement?
What you can do
Initially you should contact your landlord, who might also have been asked for a renewal fee, stating that you are reluctant to pay it because you don’t understand the necessity of it.
If your landlord is uncooperative, then you can contact the letting agents stating that you intend to remain in the property under a “periodic tenancy” and you will not pay the renewal fee. Few tenants appreciate that their tenancy automatically becomes periodic at the end of the fixed term.
However, a periodic tenancy is less secure than an assured shorthold tenancy in that there is no fixed term.
Worst case scenario if you refuse to pay a renewal fee
The letting agents could serve you with a Section 21 notice giving you 2 months’ notice to vacate the property. However, in order to force you to vacate, a possession order issued by the court will be necessary and this will involve your landlord in legal expense. If your landlord believes you are a good tenant he or she won’t want to evict you purely because you refuse to pay the letting agent renewal fee, or incur the expense of doing so. So it is pretty unlikely that this would happen.
Therefore you should be reasonably secure in remaining in the property after refusing to pay it.
You might want to add your support to Shelter’s campaign regarding unfair letting agents’ fees by completing their survey which you can access here.