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Charity Urges Tenants to Claim Back Admin Fees

A well known housing charity in Scotland is encouraging tenants to reclaim thousands of pounds of cash paid out in administration fees, and at the same time are warning property investors with an interest in landlord insurance to steer clear of unscrupulous letting agents.

The charity, Shelter Scotland, has launched a “Reclaim Your Fees” campaign throughout the country and is advising tenants in private housing that charges by letting agents for administration costs or reference checking is currently illegal and that they should request the money back. Already some tenants in Edinburgh have been successful in the small claims court but the charity is now urging the Scottish Government to outlaw tenancy fees completely in a bid to flush out bad letting agents.

Graeme Brown, a Director of Shelter Scotland. said “Over a quarter of a million families and individuals call the private rented sector home. That some letting agents – established and new – are routinely ripping off tenants by charging extortionate and unjustified upfront fees is shocking and quite simply exploitative. They are not only ripping off people who need a roof over their head and who, in many cases, have little or no choice but to pay up, but they are also undermining the work of good letting agents who offer a fair deal to tenants.”

In the near future landlords in Scotland will have to place tenant deposits in an independent tenancy deposit scheme, which should help to reduce the squabbling between landlord and tenant when a tenure is ended. However, the scheme will be retrospective and it is questionable if unscrupulous letting agents holding on to tenant deposits at the moment will have the cash flow available to hand over the money. Certainly John Blackwood. from the Scottish Landlords Association. has his doubts, saying “If letting agencies don’t have that money tucked away then agents may suddenly disappear off into the night and fold. We suspect that a lot of small agents will simply disappear because they haven’t been able to make sufficient provisions for the deposit scheme.”

Borrowing money to pay the rent is increasing

The housing charity Shelter has revealed that more tenants than ever before are now borrowing on their credit cards just to pay their rent. They reported that more than two million people have used credit cards to pay either their mortgage or rent during the last 12 months, a massive 50% increase on the previous year.

The research involved asking 2,234 people if they had borrowed on their credit card to keep a roof over their heads and 6% said yes, compared to just 4% the year before. Shelter believes the random sample could represent a national figure of more than two million people. The charity is warning that for all but the financially savvy, using credit cards to pay rent is a big mistake. Simply because paying off one debt while creating another is not the solution.

Campbell Robb, Shelter’s chief executive, said “Our research brings into sharp focus the daily struggle faced by millions of people across the country to keep a roof over their head.

“This is a totally unsustainable situation and one which we fear could see thousands more families pushed into the spiral of debt, eviction or repossession and ultimately homelessness. It’s vital that every single person using credit cards in this way takes action to get themselves out of debt and seeks urgent advice from organisations like Shelter, to ensure they don’t lose their home.”

Eviction specialists Landlord Assist say that every landlord needs to take measures to protect their own interests. They highly recommend measures such as careful vetting and full tenant referencing when letting out a property. Taking out landlord insurance will also give protection against the non payment of rent. Landlord Assist is concerned that the problem will only get worse, especially if rents increase later in the year. The VAT increase to 20% combined with the expected rise in interest rates and the Coalition Governments cuts means the impact is likely to put tenants under increasing financial pressure.