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County Court orders letting agent to return administration fee to tenant.

County Court orders letting agent to return administration fee to tenant.

January 2018

Issue: Letting agent ordered to return administration fee to tenant under the provisions within The Commission on Disposals of Land (Northern Ireland) Order 1986.

PILS Member: Housing Rights                                                    

Summary: A tenant entered into a private tenancy agreement with a landlord which contained a clause to pay a one-off administration fee to the landlord’s letting agent.  This was paid by the tenant along with the deposit and one month’s rent.  Subsequently the tenant sought the return of the fee, arguing that he was entitled to recover the monies under The Commission on Disposals of Land (NI) Order 1986.  Article 3(1) provides that:-

“Where, on a disposal of land, an agent acting for the person making the disposal is entitled to be paid a commission, any stipulation made on the disposal to the effect that the person acquiring the land shall pay the whole or any part of the commission shall be void.”

The Court was satisfied that the tenancy agreement, between the landlord and tenant, fell within this provision.  The Court held that the ‘stipulation’ element of the provision was met as a clause in the tenancy agreement imposed an obligation on the tenant to pay the administration fee.  This was also conveyed orally to the tenant as a requirement he must meet to lease the property. 

The Court also considered the ‘commission’ element of the provision.  It held that commission was “remuneration paid to an agent for the work they have been commissioned to do”.  The letting agent listed which services the administration fee covered which included checking the tenant’s references and providing keys to the property.  The Court was satisfied that these services were carried out by the letting agent on behalf of the landlord.  In paying the administration fee, the tenant was contributing in part towards the costs of services the letting agent had been commissioned by the landlord to do. 

The Court concluded that the payment of the administration fee was void under the provisions of the 1986 Order and the tenant was entitled to have the monies returned to him.

Impact: This ruling will undoubtedly benefit many people living in rented accommodation.