Prosecutors urge victims of tenancy fee fraud to contact police

Scottish letting agents who defrauded tenants out of an estimated £2 million pounds per year have escaped prosecution as the crimes have gone unreported. Thousands of people who have rented a property in the last six years appear to be unaware that they have been the victim of financial crime. Information released today under the Freedom of Information Act reveals that no criminal charges have been brought under a law introduced to protect tenants from financial exploitation.

The fraud is simple. A letting agent agrees to manage a vacant property, charging  the landlord a fee for their services,  which include drawing up the tenancy agreement and verifying the background – financial, employment, and renting history – of prospective tenants . The letting agent then charges twice for the same work, with the second bill going to the tenant! It is common practice in the private rented sector for letting agents to charge “credit search”, “referencing”, and  “administration” fees to prospective tenants. This practice was criminalised by the Rent (Scotland) Act 1984, along with other abuses such as requiring that tenants make loans to their landlord, buy the furniture in the property at inflated prices, or pay rent before it becomes due.

Despite the Scottish Government recently confirming that such charges – known as premiums – have been illegal for nearly 30 years, nearly all tenants are unaware of their rights. The law states that victims are entitled to a refund. Only one case has been referred by the police to the prosecuting authorities, and criminal proceedings were not commenced. Those convicted of breaking the law face fines of up to £1,000, a criminal record, and must refund the bogus charges. The Crown Office and Procurator Fiscal Service – responsible for the prosecution of all crime in Scotland – has today urged victims to contact the police.

A tenants rights campaigner in Edinburgh, speaking on the condition of anonymity, identified several well known letting agencies in the Capital who have broken the law by charging such premiums. “Letting agencies, if convicted, could forfeit all the profit they have made from illegal fees going back six years under a government scheme designed to ensure crime does not pay. A specialist task force known as the Civil Recovery Unit confiscates illicit profits from prostitutes, drug dealers, fraudsters, and other criminals and uses the money to benefit local communities. These agencies charged premiums averaging over a hundred pounds on every change of tenancy, across hundreds of managed properties, for many years. Several million pounds are at stake.”

The victims of this hidden crime wave are amongst those hardest hit by the economic crisis: families unable to afford to buy their own home, people who must relocate to find work, and students.

 

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