Tenancy renewal fee for periodic term

jemhill

Hi all

I'm in some need of advice please - here's the situation...

I signed up to a Assured Tenancy Agreement for 1 year starting 1st July 2011. When this term expired I didn't sign a new tenancy agreement as I knew this would mean that the AST would automatically become as Periodic Tenancy Agreement by default which is what I wanted. When this was about to happen (at the end of June this year) I received a letter from my letting agent asking me for £80 +VAT for new credit checks. I asked them how this was possible because as far as I understand I am simply holding over on an existing AST. They replied by saying it was a credit check that their insurance company required every 6 months. I have not signed any new agreement so I can only assume this is yet again another LA scam!

Moreover to this issue, I handed my notice in on my flat at the end of August and i'm leaving at the end of October. I just cant see the justification of asking for a credit check to cover an insurance on a (now) rolling periodic contract!

In the original Tenancy agreement it states that a renewal fee of £80+VAT will be charged at the end of the fixed term period if a new contract is required. It then states that if the AST becomes a periodic agreement then further credit checks will be made but it mentions no charge for this - just states that the re-checks will be made.

Your advice would be much appreciated - Thanks!

BitterAndTwisted

Of course it's a ruddy scam. If their insurance required a new credit-check every six months, why was one not carried out half-way through your AST?

Unless there's a clause in the tenancy agreement requiring you to pay this fee I'd completely ignore it and make them justify that charge via a deduction from your deposit through the deposit-protection scheme's arbitrators once you've disputed it.

Meanwhile I would not enter into a discussion with the agent about it.

jemhill

Hi - thanks for your reply.

That's a good point regarding not doing a credit check after 6 months of my 1 year contract.

It does state in my agreement that if the AST becomes a periodic agreement then further credit checks will be made but it mentions no charge for this - just states that the re-checks will be made.

Thanks

princeofpounds

They can't charge you on the basis of such a clause. It would have to mention an explicit basis for such a charge to have a hope of being enforceable.

jemhill

There is no explicit mention that the credit check is specifically a requirement of their insurance company. All I can assume is that their insurance company require a credit check to ascertain if I am in a financial state to cover the next 6 months of rent but as i'm now running month to month on a periodic agreement then this has to be bull!!

rpc

jemhill wrote: »

It does state in my agreement that if the AST becomes a periodic agreement then further credit checks will be made but it mentions no charge for this - just states that the re-checks will be made.

So they can probably go ahead and do a credit search. What they can't do is charge you for it - you agreed to the check, not to any fees.

For any fee to have been agreed, it would have to be explicit.

Ignore them, or write and remind them that the contract does not state any charges are due.

I don't see where the insurance company come into it, unless the LL is on one of these "guarnateed rent" deals. Even if he is, that's a matter between him and the agent and nothing to do with you. Personally, I'd be annoyed at searches appearing on my file every 6 months regardless of fees.

jemhill

Thanks for your reply. You're correct - as far as the original Tenancy agreement states there will be further checks made at 6 month intervals if I go on to a periodic - In that sentence it does not state that I have to pay for them - it only refers to a charge in the line above which states that if a new agreement is drawn up then a charge of £80 +VAT will be charged.

With regards to the Insurance then I just think this is them trying to find a reason to charge me the fee. Apparently they charge both the tenant and the landlord to cover this cost!!!?

rpc

jemhill wrote: »

With regards to the Insurance then I just think this is them trying to find a reason to charge me the fee. Apparently they charge both the tenant and the landlord to cover this cost!!!?

Why make £80 when you can make £160?

DVardysShadow

jemhill wrote: »

With regards to the Insurance then I just think this is them trying to find a reason to charge me the fee. Apparently they charge both the tenant and the landlord to cover this cost!!!?

You are not a party to this insurance as I understand it. You will never collect on a claim, you don't pay the premiums. It is the LL's choice to take this insurance. Let them pay.

jemhill

Ok, I just called the letting agent and said that I had taken legal advice (I spoke to an adviser at Shelter earlier) and this is pretty much what I said...

" I've taken legal advice and I am not going to pay the renewal fee based on the fact that i'm holding over on an existing Assured Tenancy Agreement as a Periodic tenant - no agreement has been signed. If the renewal fee is to cover an insurance policy to cover yourselves or the Landlord if I fall into arrears with my payments then this is a cost that should be covered by the Landlord - not the tenant."

The agent then said its in my tenancy agreement that I signed that I had to pay this fee even if I went on to a periodic tenancy to which I replied

"It actually states that there will be a further credit check if I go onto a periodic - the only mention of costs for this check is if I sign a new Assured Shorthold Tenancy"

Her reply was " Your point has been taken into account and I understand that you are saying you refuse to pay. This is not to say that we will not pursue the fee but your opinion has been taken into account"

What do you guys think...?

princeofpounds

They will either conveniently forget about it, try to charge your deposit on departure, or send a threatening letter at some stage. Probably in order of descending probability.