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Hidden letting agent fees in Scotland

Tim Williamson
Tim Williamson

In Scotland fees to tenants, known as ‘premiums’, were banned under the Rent (Scotland) Act 1984, with legislation clarified by the Private Rented Housing (Scotland) Act of 2011. Since then, the Scottish Government have been ruthless in decimating letting agent fees to tenants in the private rented sector.  The result has been a shift to agents charging landlords more or absorbing the lost revenue.  Key-Lets took the second option.

The Letting Agent Code of Practice (Scotland) Regulations 2016 require letting agents to declare their fees in their management agreements/terms of business.  This major piece of legislation sets standards within the market.  It is the service benchmark against which landlords and tenants can seek redress from the First-tier Tribunal for Scotland.

The Letting Agent Code of Practice[1] is split into sections.  Letting agents Terms of Business are found in Section 3 of the Code where fees, charges and financial arrangements are laid out.

At the end of Section 5, Contractors and third parties, that a duty to disclose hidden letting agent fees is stated under rule 96:

On request, you must disclose to landlords, in writing, whether you receive any commission, fee, rebate or other payment or benefit and any financial or other interest you receive from a contractor/third party you appoint.

The Code recognises some letting agents inflate landlords bills by adding their own administration charges or get the trades to provide inflated invoices to include agent rebates.

Landlords who are charged high repair costs for minor work can now challenge their letting agents and either move to another letting agent or negotiate a better working relationship. 

Letting agents who do not pass on trade invoices to landlords but make a charge directly of the monthly statement for ‘work carried out’ are likely to be using hidden letting agent fees to boost their income. 

Such practice is not only expensive to landlords, lowering the profitability of their investment, but also potentially puts the tenant, the landlord and property at risk. 

Trade invoices clearly identify who carried out the work, their trade affiliations, and registrations, as well as their liability if anything goes wrong.  Where the trader is hidden under a general deduction title there are none of the safeguards an invoice provides. 

In fact, it could be a case of an unskilled person carrying out the work, as alleged in a Daily Record[2] report in November 2020.

Key-Lets use bone fide contractors whose credentials and insurance we have checked to ensure our landlords are protected.  Trade invoices are provided with our Key-Lets statements.

[1] https://www.gov.scot/publications/letting-agent-code-practice/

[2] https://www.dailyrecord.co.uk/news/scottish-news/watchdog-probes-scottish-firm-over-23085546


Call Tim on 01292 289289 or Email: [email protected]

We have a number of helpful videos on our YouTube channel.

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TIM WILLIAMSON

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