Querying Letting Agent Change of Tenant Fees

Anth0nie

I've had a look on the forum and I can't find an answer to this. A fixed-term 6 month joint AST agreement ends in April 2020. The agreement had three tenants listed on it. One tenant is leaving (former tenant) two are remaining.

The former tenant notified the Letting Agent 2 months prior to the tenancy agreement ending that they would be leaving the property. The two remaining tenants have found a replacement tenant and notified the Letting Agent that they had found a replacement tenant.

The Letting Agent has requested the new tenant pay a "Tenant Replacement Fee". The new tenant queried this as the Tenant Fee Act 2019 permits letting agents to charge up to £50 for a "variation, assignment or novation of a tenancy", however as the agreement ends prior to them moving in, they feel that this does not apply and that it is classed as a new tenancy as for it to be a renewal all the parties involved are required to be the same. Would this be classed as a novation of the contract even though the original one has ended?

The Letting Agent says they can charge the fee regardless of the tenancy ending as the former tenant is being replaced.

Under the Tenant Fee Act 2019 a Letting Agent can not charge fees for setting up nor renewing contracts.

Is the tenant or the Letting Agent correct? Is a Letting Agent permitted to charge a "Tenant Replacement Fee" at the start of a new contract?

Comms69

The tenancy does not end because it reaches a certain date. A tenancy can end either by court order, or by tenants serving notice. You have served notice. The tenancy will end.

Now you are partly correct under those conditions this would be a new tenancy. BUT if you dont agree and you carry on living there, you will be liable for double rent. So ye, which hill to die upon?

greatcrested

Anth0nie said:

I've had a look on the forum and I can't find an answer to this. A fixed-term 6 month joint AST agreement ends in April 2020. The agreement had three tenants listed on it. One tenant is leaving (former tenant) two are remaining.

The former tenant notified the Letting Agent 2 months prior to the tenancy agreement ending that they would be leaving the property. The two remaining tenants have found a replacement tenant and notified the Letting Agent that they had found a replacement tenant.

The Letting Agent has requested the new tenant pay a "Tenant Replacement Fee". The new tenant queried this as the Tenant Fee Act 2019 permits letting agents to charge up to £50 for a "variation, assignment or novation of a tenancy", however as the agreement ends prior to them moving in, they feel that this does not apply and that it is classed as a new tenancy as for it to be a renewal all the parties involved are required to be the same. Would this be classed as a novation of the contract even though the original one has ended?

The Letting Agent says they can charge the fee regardless of the tenancy ending as the former tenant is being replaced.

Under the Tenant Fee Act 2019 a Letting Agent can not charge fees for setting up nor renewing contracts.

Is the tenant or the Letting Agent correct? Is a Letting Agent permitted to charge a "Tenant Replacement Fee" at the start of a new contract?

The tenancy is not ending.

Put aside for a minute the fact that one tenant is leaving: when the fixed term expires (April Xth 2020), unless all 3 joint tenants leave, the tenancy simply continues on a periodic (monthly or weekly rolling) basis. See

Post 4: Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

Now - one tenant wishes to leave. Firstly, notice is not required to end a tenancy at the expiry of the fxed term. Provided all tenants leave, the tenancy would end. So the notice served by the 'departing' tenant has no legal force or meaning.

Secondly, there are two ways the change of tenant names can be managed:

1) end the existing tenancy, either at the expiry date (all 3 tenants must leave),or by 'surrender' which requires mutual consent of all 3 tenants + landlord. The deposit must be returned. A new tenancy can then be created, with new names, and a new deposit taken and protected. You are right that in that case, as it's a new tenancy, no fee can be charged

2) The existing tenancy continues beyond April Xth 2020, on a periodic basis (as above), but with an 'assignment' taking place ie one new name is substituted for an existing name. See sample below. In this case, as there is no new tenancy, the LL can charge a fee for the assignment. The existing deposit remains in place, but as part of the assignment the departing tenant's 'share' of the deposit is repaid by the incoming tenant.

https://www.landlordzone.co.uk/pdf/Licence-Deed-of-Assignment.pdf

Comms69

greatcrested said:

Anth0nie said:

I've had a look on the forum and I can't find an answer to this. A fixed-term 6 month joint AST agreement ends in April 2020. The agreement had three tenants listed on it. One tenant is leaving (former tenant) two are remaining.

The former tenant notified the Letting Agent 2 months prior to the tenancy agreement ending that they would be leaving the property. The two remaining tenants have found a replacement tenant and notified the Letting Agent that they had found a replacement tenant.

The Letting Agent has requested the new tenant pay a "Tenant Replacement Fee". The new tenant queried this as the Tenant Fee Act 2019 permits letting agents to charge up to £50 for a "variation, assignment or novation of a tenancy", however as the agreement ends prior to them moving in, they feel that this does not apply and that it is classed as a new tenancy as for it to be a renewal all the parties involved are required to be the same. Would this be classed as a novation of the contract even though the original one has ended?

The Letting Agent says they can charge the fee regardless of the tenancy ending as the former tenant is being replaced.

Under the Tenant Fee Act 2019 a Letting Agent can not charge fees for setting up nor renewing contracts.

Is the tenant or the Letting Agent correct? Is a Letting Agent permitted to charge a "Tenant Replacement Fee" at the start of a new contract?

The tenancy is not ending.

Put aside for a minute the fact that one tenant is leaving: when the fixed term expires (April Xth 2020), unless all 3 joint tenants leave, the tenancy simply continues on a periodic (monthly or weekly rolling) basis. See

Post 4: Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

Now - one tenant wishes to leave. Firstly, notice is not required to end a tenancy at the expiry of the fxed term. Provided all tenants leave, the tenancy would end. So the notice served by the 'departing' tenant has nolegal force.

Secondly, there are two ways the change of tenant names can be managed:

1) end the existing tenancy, either at the expiry date (all 3 tenants must leave),or by 'surrender' which requires mutualconsent of all 3 tenants + landlord. The deposit must be returned. A new tenancy can then be created, with new names, and a new deposit taken and protected. You are rght that in that case, as it's a new tenancy, no fee can be charged

2) The existing tenancy continues beyond April Xth 2020, but with an 'assignment' taking place ie one new name is substituted for an existing name. See sample below. In this case, as there is no new tenancy, the LL can charge a fee for the assignment. The existing deposit remains in place, but as part of the assignment the departing tenant's 'share' of the deposit is repaid by the incoming tenant.

Going to disagree (for a change!) the notice by the departing tenant could indeed be considered notice to end the tenancy - they are joint tenants after all. In which case the LL may have a claim of double rent (Distress of Rent Act)

greatcrested

Comms69 said:

greatcrested said:

Anth0nie said:

I've had a look on the forum and I can't find an answer to this. A fixed-term 6 month joint AST agreement ends in April 2020. The agreement had three tenants listed on it. One tenant is leaving (former tenant) two are remaining.

The former tenant notified the Letting Agent 2 months prior to the tenancy agreement ending that they would be leaving the property. The two remaining tenants have found a replacement tenant and notified the Letting Agent that they had found a replacement tenant.

The Letting Agent has requested the new tenant pay a "Tenant Replacement Fee". The new tenant queried this as the Tenant Fee Act 2019 permits letting agents to charge up to £50 for a "variation, assignment or novation of a tenancy", however as the agreement ends prior to them moving in, they feel that this does not apply and that it is classed as a new tenancy as for it to be a renewal all the parties involved are required to be the same. Would this be classed as a novation of the contract even though the original one has ended?

The Letting Agent says they can charge the fee regardless of the tenancy ending as the former tenant is being replaced.

Under the Tenant Fee Act 2019 a Letting Agent can not charge fees for setting up nor renewing contracts.

Is the tenant or the Letting Agent correct? Is a Letting Agent permitted to charge a "Tenant Replacement Fee" at the start of a new contract?

The tenancy is not ending.

Put aside for a minute the fact that one tenant is leaving: when the fixed term expires (April Xth 2020), unless all 3 joint tenants leave, the tenancy simply continues on a periodic (monthly or weekly rolling) basis. See

Post 4: Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

Now - one tenant wishes to leave. Firstly, notice is not required to end a tenancy at the expiry of the fxed term. Provided all tenants leave, the tenancy would end. So the notice served by the 'departing' tenant has nolegal force.

Secondly, there are two ways the change of tenant names can be managed:

1) end the existing tenancy, either at the expiry date (all 3 tenants must leave),or by 'surrender' which requires mutualconsent of all 3 tenants + landlord. The deposit must be returned. A new tenancy can then be created, with new names, and a new deposit taken and protected. You are rght that in that case, as it's a new tenancy, no fee can be charged

2) The existing tenancy continues beyond April Xth 2020, but with an 'assignment' taking place ie one new name is substituted for an existing name. See sample below. In this case, as there is no new tenancy, the LL can charge a fee for the assignment. The existing deposit remains in place, but as part of the assignment the departing tenant's 'share' of the deposit is repaid by the incoming tenant.

Going to disagree (for a change!) the notice by the departing tenant could indeed be considered notice to end the tenancy - they are joint tenants after all. In which case the LL may have a claim of double rent (Distress of Rent Act)

Have to disagree!

1) notice during the fixed term has no legal value - the tenancy either ends on expiry of the fixed term (if the tenants leave), irrespective of whether 'notice' has been given or not, or it continues (periodic), if they stay. The only exception would be if there were a Break Clause in the contract and notice was being served during the fixed term to activate the BC.

2) activation of a Break Clause in a fixed term requires the agreement/signiture of all joint tenants (unike notice diring a periodic tenancy)

But quite apart from this disagreement, the OP's landlord/agent is charging a fee for assignment - and that is allowed under the Tenant Fees act.

Anth0nie

Agreed the tenancy would not end it was going to become a periodic tenancy, however, as the LL/Letting Agent have stipulated that they will be setting up a new 6 month contract, surely this classes as a new agreement between the 3 tenants and the LL?

greatcrested

Yes- if a new fixed term contract is signed with different names to the preceeding one, then it is a new tenancy and no fee should be charged.

But you did not state this originally. You simply said that "The Letting Agent has requested the new tenant pay a "Tenant Replacement Fee" which is effectively an assignment (hence see above).

Comms69

greatcrested said:

Comms69 said:

greatcrested said:

Anth0nie said:

I've had a look on the forum and I can't find an answer to this. A fixed-term 6 month joint AST agreement ends in April 2020. The agreement had three tenants listed on it. One tenant is leaving (former tenant) two are remaining.

The former tenant notified the Letting Agent 2 months prior to the tenancy agreement ending that they would be leaving the property. The two remaining tenants have found a replacement tenant and notified the Letting Agent that they had found a replacement tenant.

The Letting Agent has requested the new tenant pay a "Tenant Replacement Fee". The new tenant queried this as the Tenant Fee Act 2019 permits letting agents to charge up to £50 for a "variation, assignment or novation of a tenancy", however as the agreement ends prior to them moving in, they feel that this does not apply and that it is classed as a new tenancy as for it to be a renewal all the parties involved are required to be the same. Would this be classed as a novation of the contract even though the original one has ended?

The Letting Agent says they can charge the fee regardless of the tenancy ending as the former tenant is being replaced.

Under the Tenant Fee Act 2019 a Letting Agent can not charge fees for setting up nor renewing contracts.

Is the tenant or the Letting Agent correct? Is a Letting Agent permitted to charge a "Tenant Replacement Fee" at the start of a new contract?

The tenancy is not ending.

Put aside for a minute the fact that one tenant is leaving: when the fixed term expires (April Xth 2020), unless all 3 joint tenants leave, the tenancy simply continues on a periodic (monthly or weekly rolling) basis. See

Post 4: Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

Now - one tenant wishes to leave. Firstly, notice is not required to end a tenancy at the expiry of the fxed term. Provided all tenants leave, the tenancy would end. So the notice served by the 'departing' tenant has nolegal force.

Secondly, there are two ways the change of tenant names can be managed:

1) end the existing tenancy, either at the expiry date (all 3 tenants must leave),or by 'surrender' which requires mutualconsent of all 3 tenants + landlord. The deposit must be returned. A new tenancy can then be created, with new names, and a new deposit taken and protected. You are rght that in that case, as it's a new tenancy, no fee can be charged

2) The existing tenancy continues beyond April Xth 2020, but with an 'assignment' taking place ie one new name is substituted for an existing name. See sample below. In this case, as there is no new tenancy, the LL can charge a fee for the assignment. The existing deposit remains in place, but as part of the assignment the departing tenant's 'share' of the deposit is repaid by the incoming tenant.

Going to disagree (for a change!) the notice by the departing tenant could indeed be considered notice to end the tenancy - they are joint tenants after all. In which case the LL may have a claim of double rent (Distress of Rent Act)

Have to disagree!

1) notice during the fixed term has no legal value - the tenancy either ends on expiry of the fixed term (if the tenants leave), irrespective of whether 'notice' has been given or not, or it continues (periodic), if they stay. The only exception would be if there were a Break Clause in the contract and notice was being served during the fixed term to activate the BC.

2) activation of a Break Clause in a fixed term requires the agreement/signiture of all joint tenants (unike notice diring a periodic tenancy)

But quite apart from this disagreement, the OP's landlord/agent is charging a fee for assignment - and that is allowed under the Tenant Fees act.

ok, i'm willing to accept that.

My initial thought process was assignment also, so i'll concede the point

Anth0nie

So just to clarify:
- An assignment is to transfer the agreement to another party (former tenant to new tenant)
- A variation is to change particulars of the contract (e.g. addition of pets or a fourth tenant)
- A novation "occurs where all the parties consent to creating a new agreement" (Shelter).
- A renewal of a current fixed term tenancy assumes that all the parties involved are the same and  the property is the same
- A fixed term agreement becomes periodic at the end of the agreement, renewing (in this case) every month.  

What is the difference between a novation and creating a new fixed term agreement?

greatcrested

Can't answer as never come across novation.

Search of Shelter = blank.

Link please.

- A variation is to change particulars of the contract (e.g. addition of pets or a fourth tenant)

I believe an additional (4th) tenant would require assignment, from the existing 3 tenants to the existing 3 + 1 new, but it's possible this could be done via a variation. Either way, all 4 + landlord would be required to consent.

Anth0nie

Search of Shelter = blank. 

Link please.

Sorry I've not been around long enough to post links - 

However from Shelter's Legal website under Paying for Accomodation > Tenant Fees > Tenant Fees: Permitted Payments >  Changes to tenancy it says:
"A payment in respect of the ‘variation, assignment or novation of a tenancy’ at the tenant/licensee’s request is a permitted payment.

This could, for example, include agreeing to a tenant’s/licensee’s request to keep a pet, take in a lodger or assign a tenancy following a relationship breakdown.

Novation occurs where all the parties consent to creating a new agreement. This could happen, for example, where one joint tenant wishes to leave and the landlord agrees for her/him to find someone to ‘take over’. If all joint tenants (including the leaving tenant) and the landlord agree, a new contract could be created and the original joint tenancy would be in effect surrendered by operation of law (for more information, see 'Implied surrender' on the Surrender page).

The fee is capped: charging more than £50 for each change requested is not permitted, unless the landlord/agent’s reasonable costs are greater."

I've searched the forum and cannot find another example of a novation