Contract renewal fee question

[machina]

Hi All,

 

I know tenancy contract renewals are something that have been discussed here quite a bit previously, but I'm unclear on a point relating to this case three years ago between OFT and Foxtons.

 

My girlfriend has just been advised by Foxtons that they plan to deduct £96.00 from her deposit because around 6 months ago the fixed term agreement lapsed into a periodic one (monthly). At the time all parties agreed this was fine.

 

My girlfriend did sign a form from Foxtons on taking the flat, that had a clause that read:

 

"If the tenancy is renewed, we will make a charge of £80 + VAT to cover our administration".

 

From what I can tell, doing nothing and just letting the tenancy automatically go into a periodic one doesn't constitute as renewing, but I'm not a lawyer! They basically have done no 'administration'.

 

My girlfriend did query in general why they were charging a renewal fee and the response was:

 

"The renewal fee is charged whenever a tenancy passes its original tenancy length. As this tenancy became a periodic tenancy you stayed longer than the original end date of the 27th May 2013."

 

It's also suspicious that they are taking it out of the deposit (or at least trying to), which surely isn't for these sorts of items.

 

Does anyone have any experience here? It seems like total bs to me. I was reading about that OFT v Foxtons case but that seemed more related to admin fees being charged to landlords rather than the tenants.

 

I'm not sure how anyone can get away with charging almost £100 (or anything in fact) for doing precisely no work.

 

Before she goes in guns blazing it would be good to get a clearer picture of where she stands.

 

Thanks in advance

[mariner51]

I cannot remember the details of the oriig Foxton's case, but IMO a SPT is not a renewal nor extension for such clause charges.

Tech a SPT is a 'new' contract, that is rerenewed for each T period, so they really should charge £96 each T period. (month) I suggest your g/f should visit Foxtons with a 'friend' from TS or plain clothes PC, or put mobile on voice recorder.

[Beatrice Bee]

Statutory Periodic Tenancy: new tenancy. Have they re-protected the tenancy deposit? Is it that with some of the tenancy deposit schemes it is not necessary?

[Steve__M]

It's a semantic argument, but I would say that the statutory periodic tenancy that started once the fixed term ended was a *new* tenancy not a *renewed* tenancy.

 

So go in all guns blazing.

 

I don't think it would be a requirement to renew protection of the deposit.

 

It's this sort of behaviour that leads to the former Foxton's owner having the money to excavate a huge garage under a London park to store his fleet of Ferraris.

 

http://www.dailymail.co.uk/news/article-481013/Foxtons-owner-plans-multi-million-pound-underground-extension-London-home.html

[machina]

Thanks guys.

 

Yeah she's determined not to pay it. I think the fact that the agreement stated the fee was to cover administration makes it reasonably clear to me anyway: there is no administration associated with this. No new contract was drawn up, and also the deposit was not re-protected. So they are basically asking for money for doing nothing.

 

Will respond back with the outcome

 

Cheers all

[mariner51]

Advice is that PI should be re-issued at start of SPT and I believe My Deposits do now unprotect deposit at end of fixed term requiring re-protection and regard SPT as a new Contract, following Superstrike.

 

 

So ask for a detailed breakdown of 'admin' charge.

[Beatrice Bee]

Can the OP say which tenancy deposit scheme was used at the beginning of the tenancy and when the fix term came to an end? Just to see if the agency was supposed to re-protect the deposit and re-issue the prescribed info.

 

Isn't it some of them do the above automatically whereas with other schemes the landlord / agency has to re-protect the deposit themselves.

 

Unlikely that Foxtons does not know that they have to re-protect at the end of the fix term and whether the scheme they use does it automatically.

 

In any case, isn't it that when AST turned into SPT about 6 months ago, the OP should have received, within 30 days, the PI and TD certificate?

 

The scheme's website will have the info as they tend to warn clients about issues like this to avoid statutory penalty claims for non protection.

[Beatrice Bee]

http://www.mydeposits.co.uk/landlords/faqs?page=1

 

"Q. What is the Deposit Protection fee?

 

A deposit protection fee is required to formally protect your tenant’s deposit and comply with the law. The fee protects the deposit for the duration of the tenancy agreement as stated on the AST Agreement document.

 

 

 

 

 

Q. When do I need to buy a new deposit protection?

 

If you renew, extend, amend or reissue the AST Agreement (by whatever means) you will need to purchase a further deposit protection from my|deposits.

The only exception to this rule is if you allow the original AST Agreement to run into a Statutory Periodic Tenancy (SPT) where no further protection fee is payable. An SPT is where both you and the tenant continue with the letting agreement on the original terms and conditions (with the exception of rent revisions) and no new tenancy agreement or amendment is issued.

We recommend that you re-serve the Prescribed Information within 30 days of the creation of a statutory periodic tenancy."

 

 

Superstrike Limited v Marino Rodrigues [2013] EWCA Civ 669

 

Following Superstrike, ASTs that turn into a SPT after 15th June 2013 are considered to be a new tenancy. ??

 

Superstrike decision was made on 14th June 2013 so guessing it has immediate effect..

 

MyDeposits state that renewal of tenancy means protection fee has to be paid. Creation of a new tenancy [sPT] by operation of law [superstike] upon expiry of fix term: LL has 30 days to re-protect deposit and re-issue prescribed info.

 

MyDeposits does not say anything about "my idea" of the scheme automatically re-protecting deposits on expiry of fix term. It says SPTs are exceptions and deposit does not have to be reprotected. Well, it was "true" until Superstrike..

 

A new tenancy is created if the period of the original fix term is extended.

 

"If you renew, extend, amend or reissue the AST Agreement (by whatever means) you will need to purchase a further deposit protection from my|deposits."

 

Foxtons renewed the tenancy agreement, so they say. If OP's friend's AST's fix term expired after Superstrike [after 14 June 2013], a new tenancy came into being and Foxtons had 30 days to reprotect the deposit.

 

OP states deposit was not re-protected. Would need to know when exactly the fix term came to an end. "About 6 months ago" is about the time the decision was made in the Superstrike case.

 

If Foxtons were not caught out, other [smaller] landlords will have been.

 

 

Housing Act 1988, Section 5, Security of Tenure:

 

(2)If an assured tenancy which is a fixed term tenancy comes to an end otherwise than by virtue of—

 

(a)an order of the court [F2of the kind mentioned in subsection (1)(a) or (b) or any other order of the court]F2, or

 

(b)a surrender or other action on the part of the tenant,

 

then, subject to section 7 and Chapter II below, the tenant shall be entitled to remain in possession of the dwelling-house let under that tenancy and, subject to subsection (4) below, his right to possession shall depend upon a periodic tenancy arising by virtue of this section.

 

[ATTACH=CONFIG]49005[/ATTACH]"A periodic tenancy arising": it does not say a new tenancy is created upon the periodic tenancy arising.

 

It is the interpretation of law by the courts that we now look at SPT as a new tenancy and deposits have to be reprotected within 30 days of the SPT "being born".

 

I will stand to be corrected. English is second language so my interpretation of the law is: would like to see agencies who demand £90 for doing nothing realize that they failed to protect the deposit when AST turned into SPT and statutory penalty for non-protection they can deduct from the rent charged.

[Beatrice Bee]

Looked at the original post and it says 27th May 2013 is the end date of the fix term.

 

The tenancy was not renewed unless a new AST was signed.

 

"The renewal fee is charged whenever a tenancy passes its original tenancy length."

 

Is the above in Foxtons terms and conditions? ie not in the tenancy agreement itself but in the terms and conditions of business.

 

Ask a copy to be emailed to you?

[mariner51]

BB your analysis is correct AFAIK

In OPs case he states AST became SPT on 27 May 13, prior to superstrike ruling which cannot be applied retrospectively.

As My Deposits states Following Superstrike, ASTs that turn into a SPT after 15th June 2013 are considered to be a new tenancy.

[mariner51]

Prior to Superstrike an SPT was a new type of T with all orig AST T&Cs intact, save for the Notice service dates being linked to Tenancy periods as defined by the Statute, with no requirement to return deposit.

If deposits have to be returned by the Scheme then re-protected, the deposit will be unprotected for several days through no fault of the LL.

Sensible position is for Approved Scheme to retain protected deposit and for LL to re-issue orig PI.

LAs should not be abe to charge the SPT as an extension, renewal or a new AST IMO

 

 

We are still waiting if the Superstrike decision will be overturned or appealed.

[machina]

Apologies for the delay everyone.

 

The DPS was MyDeposits, so yeah it looks like they don't require reprotection when a fixed term moves into a periodic.

 

re Beatrice Bee, the phrase

 

"The renewal fee is charged whenever a tenancy passes its original tenancy length."

 

was not in the agreement. This was what a foxtons employee wrote to my girlfriend when she first questioned the fee. The agreement she signed states:

 

"If the tenancy is renewed, we will make a charge of £80 + VAT to cover our administration".

 

Which is completely different.

 

Since my last post Foxtons have responded by reiterating that because she stayed beyond the fixed term length than the fee still stands.

 

She is going to respond asking to clarify exactly how that relates to the agreement she signed and for a full itemised breakdown of their 'administrative' costs.

 

Cheers all!

[mariner51]

Sounds like that well-known LA is using the Superstrike ruling that SPT is a 'new' Tenancy to justify charging a renewal fee for 'new' T.

 

 

If true, I am sure local/tabloid press , Watchdog and Panorama may be interested in investigating.

 

 

Another 'unforseen' consequence of Superstrike?

[machina]

Been a while for anything happening on this.

 

My gf basically told Foxtons to return her deposit in full as the disputed amount for the renewal fee isn't eligible to be held against the deposit anyway (as detailed in the contract).

 

They did return the deposit but they have taken the renewal fee out anyway! Is that even legal? Ridiculous.

[mariner51]

Obviously Foxtons consider they have considered & rejected your g/fs case so refer case to OFT or rel Ombudsman IMO.

[Steve__M]

Is your gf going to raise a dispute with Mydeposits?