Photograph of a contract which has just been signed; a right hand holding a pen is poised above the paper.

Image by jk5848, shared under a Creative Commons Licence

The Scottish Government have announced that they will clarify the existing laws against letting agency fees, confirming that the fees which many tenants are forced to pay for referencing, credit checks, inventories, or unspecified admin costs, are in fact illegal.

Although the Rents (Scotland) Act 1984 states that landlords and letting agents may not charge tenants “premiums” – defined in the Act as anything that isn’t rent or deposit – many letting agents have justified their fees by claiming that the legislation is unclear, and doesn’t specifically forbid the types of fees they require tenants to pay in order to get a lease. In Edinburgh, tenants can pay over £100 per person in fees in addition to a deposit, and one agency, DJ Alexander, has even replaced deposits with a non-refundable cleaning fee.

Over the past year, an increasing number of tenants (including me) have challenged letting agency fees in small claims court, and anecdotal evidence suggests that many letting agents will settle out of court, rather than have the case heard by a sheriff. Claiming your fees back is a relatively simple process, and organisations including EPTAG, the Govan Law Centre, and Shelter have produced resources to guide tenants through it. Shelter have estimated that the cases currently in progress may lead to over £100,000 being refunded.

This announcement from the Scottish Government is welcome, but they have yet to explain how the law will be enforced. One suggestion is that information on the legal status of fees will be included in the Tenant Information Packs which all private sector landlords and letting agents will be required to provide to tenants when they first sign a lease. The packs are intended to give tenants guidance on their rights, and explain what they can do if the landlord doesn’t uphold their part of the contract. This might help in some cases, but given the number of letting agents who simply claim “that doesn’t apply to us” when prospective tenants question the legality of fees, it might require some intervention from local authorities or the Private Rented Housing Panel before the practice is stamped out entirely.

With this announcement, and the recent introduction of the deposit protection scheme, the Scottish Government are making steps towards rebalancing the private rental sector in the interest of tenants, but it’s not all good news. Just this week, a group of landlords have started a campaign to MSPs to create a register of tenants, which would allow them to effectively operate a blacklist. Several private companies already run databases that allow landlords to submit references on their previous tenants, along with an address history – in most cases, without the tenant’s knowledge or permission. I wrote about tenant referencing agencies earlier in the year, and as if to illustrate how shady some of these companies are, the director of one of them threatened me with libel action, even though none of the information I published was untrue.

Referencing services could become the next big issue in tenants’ rights in Scotland, particularly as landlords and letting agents will feel that they’re “owed” something by the government for the loss of tenants’ fees. Landlords are a political force to be reckoned with: they have money and social status, and can afford to fund organisations like the Scottish Association of Landlords, which employ full-time staff to promote their interests – but the decision not to legalise letting agency fees shows that tenants’ concerns are finally starting to gain some traction.