The cost of using a letting agent for possession proceedings

Here is a question to the blog clinic from Ellory (not his real name).

If a landlord incurs costs instructing an agency to initiate and manage eviction proceedings against a tenant – can the tenant be made liable for these costs?

Answer

There are several things to consider here:

• The effect of the tenant fees legislation,
• The fact that litigation is a ‘reserved activity’
• The role of Judges in awarding costs, and
• Practical considerations

The Tenant Fees Rules

Under these rules, the amount of fees and costs which landlords and letting agents can charge to tenants has been reduced to those permitted by the acts.

However, the rules do not prohibit genuine compensation for breach of the terms of the tenancy agreement. Which means that in some circumstances landlords may be entitled to recover their costs and in others, they will not.

For example, if the landlord is recovering possession under section 21 or ground 1 (the owner-occupier ground) then the landlord would not normally be entitled to recover anything other than costs awarded by the court (discussed below).

Because the eviction did not result from the tenant’s breach of his agreement.

However, if the tenant is being evicted because of rent arrears or anti-social behaviour then it is arguable that compensation can be claimed.

The amount recoverable and indeed whether anything is recoverable at all will depend largely on the terms of the tenancy agreement. And also on the conduct of any proceedings.

Litigation – a reserved activity

I said above that litigation is a ‘reserved activity’ What does that mean?

It means that representing people in court proceedings is something reserved to solicitors firms who are regulated by the Solicitors Regulation Authority (SRA). (There is nothing to stop people representing themselves though).

This rule is in place mainly to protect the public. Litigation can be very expensive indeed and hard to stop once started. So if unqualified people were allowed to represent clients in litigation they could cause their clients’ huge losses through ignorance or acting irresponsibly.

Solicitors on the other hand (although not 100% perfect) will have been properly trained and firms are required to carry extensive insurance which will protect clients in the case of solicitor negligence.

Letting agents are not authorised to conduct litigation (unless they have become regulated by the SRA which is unlikely) and so should not act as solicitors in eviction proceedings – although many do. This is a risk for their landlords though as this case shows.

Agents are though, entitled to charge (their landlords) for serving notices (which is something they are can to do on behalf of their landlord) and also for giving evidence at court as the landlord’s managing agents. However, whether those costs could be passed on to tenants is a moot point.

Litigation – costs are awarded by Judges

The other thing to say is that costs in litigation and the liability of one party to pay the costs of another is in the hands of Judges who will (or will not) make ‘costs orders’ as part of a Court Order.

In standard possession proceedings in most cases the only costs awarded are ‘fixed costs’ which are normally the court fee and a standard (and generally inadequate) sum for legal fees.

However if the landlord is not represented by solicitors (for example if the agent has been ‘helping’ the landlord do it himself) the only fixed costs that can be awarded will be the court fee.

Although I have seen it argued that tenants could be asked to pay more than the fixed costs awarded by the Court, I think in practice this is something the tenant could object to. If anything more than fixed costs are deducted from their deposit this is certainly something they could refer to adjudication.

Although if any landlords or agents have successfully claimed more than fixed costs from tenants in eviction proceedings please do leave a comment below.

In the real world

The vast majority of tenants are evicted because they are in arrears of rent. So in those cases, the landlord is lucky if he gets any of his rent paid. It is very rare indeed for him to recover anything off his legal costs.

Most landlords will (reluctantly) accept this and so long as they recover possession of their property, will not seek to chase tenants for legal costs, or indeed (in many cases) their back rent.

As if a tenant genuinely has no money how can they pay you anything? You can’t get blood out of a stone. And the costs of trying to enforce a court order against impecunious judgement debtors can be high.

It is better in most cases to accept this as part of life’s rich tapestry and move on.

 

Note– if this topic interests you, you may want to read a series I wrote in 2017 on the cost of law and justice.