Scottish Law - Pre-tenancy fees Outlawed - Apparently. Johnny English Secret Agent to the Rescue?

  • Following legal changes in Scotland pre-tenancy tenant fees have been outlawed - apparently.   Is this a case for Johnny English Secret Agent?  
  • Letting agents accused of taking secret fees by stealth might have to adapt to enable survival.
  • The problems start with due diligence.  
  • If an agent neglects the duty to check the tenants creditworthiness, as well as lifestyle checking, and if as a consequence the landlord suffers loss- then the agent risks being sued by the landlord .  So the agent will have a vested interest in paying for the cost of tenant referencing.  But how will the cost of due diligence be paid.  
  • In Scotland, governed by different laws to England and Wales E/W, tenants are currently being actively encouraged to recover historic fees as they are allegedly illegally charged according to Scottish law.
  • A Scottish agent having paid for the checks and paid office staff to process these will likely get belated short shrift from a landlord upon asking to be reimbursed - unless the terms of business provide for such belated refunded costs.  
  • So the first step in E/W might be to amend any English Terms of Business to preempt any future legislation giving rise to fees refunds and in particular pretenancy fees.
  • The landlord, statistically, receives significantly more rent, on time and in full; following adequate tenant referencing.  Agents merely receive an agreed remuneration recompensing them for acting diligently.  
  • Take away such remuneration and the service has to be paid in another way otherwise economically the agent becomes an ex-agent!  
  • Prevented by possible future legislation in E/W from approaching prospective tenants for fees, landlords would almost certainly be called upon to pay the fees in addition to other currently paid management fees, absent which their rental income and capital assets are unlikely to be as secure, as under the current system.
  • So it is in the landlords' interests to conduct checking and thus to pay consequential fees - initially.  I do not suggest this is fair, simply necessary, for the symbiotic survival of both the agent, landlord and indeed for tenant residential letting.  
  • So what is the landlords response likely to be when asked to pay additional fees, formerly paid by the tenant?  Why of course the additional cost must be added to the rent payable by the tenants to the agent and thence to the landlord completing the circuit leaving the tenant no better off!  If it aint broke - don't fix it!