Tenants’ fees

Press, 12 November 1981, Page 14

Tenants’ fees

In Residence

Bronwen Jones

PROPERTY REPORTER

Last month’s column on the legality of tenants’ fees charged by real-estate agents created quite a bit of interest, and today we have a follow-up to the discussion. Mr Andrew Alston, a senior lecturer in law at Canterbury University, has said that in his opinion, tenants’ fees charged by real-estate agents when obtaining rental accommodation for the tenants are often taken illegally. The only fee lawfully chargeable is a commission, but when an agent acts in the interest of the landlord rather than the tenant the tenant's fee is not a proper commission for agency work, he says. , An' example of-; this is where a landlord has listed a property with an agent, though without paying a listing or agency fee, and when the tenant approaches the agent for rental accommodation he is vetted for suitability on behalf of the landlord. Both Mr D. M. Forsell, the head office solicitor for the Housing Corporation, and Mr P. J. Cook, the local branch president of the Real Estate Institute, have disagreed with Mr Alston’s legal opinion. Mr Forsell says that if a real-estate agent does not seek a commission from both the landlord and tenant, and makes it clear to the landlord that he intends acting as agent for the tenant as well, then the agent may lawfully act for both parties. The agent may also charge the tenant commission rather than the landlord provided she, or he, perform some service for the tenant, even if it is only an introduction to the landlord, says Mr Forsell, who adds that this is his personal opinion rather than that of the corporation. In addition, Mr Forsell says that if what he says is right, then -the appointment of the real-estate agent as the tenant’s agent (by the tenant signing a document to say so) is not a sham as Mr Alston has said. In his reply, Mr'Alston has stood his ground. It is irrelevant that the real-estate agent may have had the tenant sign a document appointing her, or him, agent, he says. The tenant's signing does not do away with the general principles of agency, in particular; the principle that an agent is a person who can be totally trusted by the person for whom she, or he, is working. Nor does the tenant’s signing override the Rent Appeal Act 1973, which says that the only lawful payment for obtaining rental accommodation is an agent’s commission, Mr Alston says. Second, if the agent has a conflict of interest in dealing with both parties, it is no less a conflict if the landlord has consented to the agent acting for the tenant or if the agent has charged commission from the tenant only, and not the landlord. The point is that an agent can charge commission only from the person for whom he

is acting as agent — usually the landlord. Mr Alston says. Third, when an agent acts for both landlord and tenant, there is always a conflict of interest at the outset which arises from the very nature of the relationship, he says. The reality of the situation was well summed up in a recent letter to "The Press" by V. M.. Onslow: “I rented a flat from an agent a few months ago, and all the agent did was give me the key to have a look round. When I took that flat I was charged a letting fee. I was also subjected to intensive questioning to see whether I measured up to the landlord's standards, a very degrading experience. This suggests to me the realestate agent was acting for the landlord and not for me, and charging a lettiing fee was really adding insult to injury." Fourth. Mr Forsell correctly points out that the Rent Appeal Act is silent as to who is to or who may prosecute for offences against it. However, it does not follow that the Housing Corporation. which administers the Act. does not have a duty to do so. The corporation does have a duty to enforce the provisions for offences in the act. and should initiate a prosecution in an appropriate case, says Mr Alston. Mr Alston has called for an extensive review of the Rent Appeal Act.