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County Court orders letting agents to return administration fees to tenant.

County Court orders letting agents to return administration fees to tenant.

July 2018

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

PILS Member: Housing Rights                                                    

Summary: On 29th June Belfast County Court ruled that F5 Property Limited, acting as a letting agent, return an administration fee which was charged to a tenant prior to commencing his tenancy.  Belfast County Court had previously ordered, in December 2017, that another letting agent, Piney Rentals Limited, return a similar fee charged to the same tenant.

 The judgment of the Court considered the Commission on the Disposal of Lands (Northern Ireland) 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 agreements, between the landlords and tenant, fell within this provision.  The Court held that the ‘stipulation’ element of the provision was met as a clause in the tenancy agreements 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 properties. 

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 agents 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 agents on behalf of the landlords.  In paying the administration fee, the tenant was contributing in part towards the costs of services the letting agents had been commissioned by the landlord to do. 

The Court concluded that the payments of the administration fees were 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, or seeking to access, private rented accommodation and may result in a change to practices adopted by local letting agents.