51 Grandison Road, London SW11 6LS LON/00BJ/HTC/2026/0011
DECISION
Description of hearing This has been a remote hearing on the papers at the request of the Applicants and the Respondents have not requested an oral hearing. Decision of the tribunal The tribunal orders the Respondents to pay to the Applicants the sum of £5,662.16 within 14 days from the day after the date of this order. 2 The application, identity of Respondent(s) and background[1]This is an application under sections 15(3) of the Tenant Fees Act 2019 (“the 2019 Act”) for the repayment of a prohibited payment made to a letting agent.[2]The Applicants, who are not legally represented, have in their application form named as sole Respondent “Hamptons Estates and Letting Agents Battersea and Wandsworth”. In written submissions it has been stated on behalf of the Respondent(s) by the Group Legal Counsel that the correct legal entity is Countrywide Residential Lettings Limited. However, in clause 1.6 of the Deed of Surrender referred to in 4 below (which is printed on ‘Hamptons’ headed notepaper) “The Landlord’s Agent” is defined as “Hamptons, a trading name of Hamptons Estates Limited, a subsidiary of Countrywide Estate Agents Limited”. In the circumstances all three legal entities have been named as co-Respondents and it will be for the Respondents to agree amongst themselves which entity or entities should reimburse the amount paid by the Applicants.[3]On 5 April 2024 the Applicants entered into an assured shorthold tenancy agreement (“the Tenancy Agreement”) with Ilgiza Vedikhina (“the Landlord”) for a term due to expire on 5 October 2026.[4]The Applicants later requested early termination of the Tenancy Agreement and the Landlord agreed to this on certain conditions. A deed of surrender (“the Deed of Surrender”) dated 10 December 2025 was duly entered into between the Landlord and the Applicants, and clause 4.2.4 of the Deed of Surrender stated as follows: “[The Landlord and the Tenant agree …] that the Tenant shall have paid the following sums to the Landlord’s Agent within 10 working days prior to the Agreed Date: a) £5,662.16 Including VAT being a fair and reasonable amount to cover a pre-assessment of the losses incurred by the Landlord in relation to the lettings commission paid by the Landlord to the Landlord’s Agent for the unexpired term of the Tenancy”; Provided that the total amount of the payments shall not exceed the Tenant’s liability to pay the rent up to the end of the Term of the Tenancy but for this agreed surrender”. Applicants’ case[5]In their application the Applicants state that they were charged £5,662.16 by the Respondents as an early termination fee of their fixed term rental contract. They go on to state that the 2019 Act permits recovery of reasonable costs but that what they have been charged is a pro rata repayment of the full commission for the unexpired term which they believe to be unreasonable. 3[6]They add that several attempts were made by them to understand a breakdown of the costs incurred, but they were just told by the Respondents that it was a refund of the Landlord’s initial letting commission and a calculation was given. The Applicants state that they are happy to pay reasonable and proportionate costs but that £5,662.16 represents – according to their understanding – commission paid and agreed at the start of their tenancy. To pass this on is excessive in their view, and they also believe it to represent a prohibited payment under the 2019 Act. Respondents’ case[7]The Respondents summarise the chain of events leading up to the signing of the Deed of Surrender and have quoted the provision in the Deed of Surrender referred to in paragraph 4 above.[8]The Respondents then quote part of paragraph 7 of Schedule 1 to the 2019 Act and submit that the payment of £5,662.16 was a payment made in consideration of the termination of the Tenancy Agreement at the Applicants’ request before the end of the fixed term. They state that the Landlord had already paid commission to the Respondents in the sum of £17,460 in relation to the Applicants’ tenancy pursuant to the terms of business signed between the Respondents and the Landlord and that “the £5,662.16 therefore represents the actual loss suffered by the Landlord as a result of the termination of the Tenancy by the Respondents and is therefore a permitted payment under the Act”.[9]Their statement of case also includes copies of the Tenancy Agreement and Deed of Surrender, a copy of a Statement of Account and some copy correspondence. Applicants’ reply[10]In reply to the Respondents’ statement of case, the Applicants submit that the burden rests upon the Respondents to demonstrate that the amount demanded represented no more than the Landlord's actual loss. They state that they vacated the Property on 10 December 2025 and that a replacement tenant commenced occupation on 11 December 2025 and so there was no void period. Furthermore, the replacement tenancy was granted at the same rent of £6,000 per calendar month and so the Landlord suffered no loss of rental income as a result of the surrender. In addition, before the Deed of Surrender was executed and before the disputed payment was made, the Respondents had already sourced and secured the replacement tenant.[11]The Applicants note that the Respondents rely upon the assertion that the Landlord paid a certain amount to the Respondents by way of commission, but they argue that the Respondents have produced no 4 documentary evidence establishing the agency agreement relied upon or the contractual basis upon which the alleged loss arose and which alleged loss the Applicants were required to make good. The Respondents have also not provided any invoice supporting the amount claimed nor any proof of payment by the Landlord. They have not explained the methodology used to calculate £5,662.16 nor provided any analysis as to why the amount represents actual loss suffered by the Landlord.[12]The Applicants also state that the disputed payment of £5,662.16 was paid directly to Hamptons (as shown in a screenshot of the relevant bank transaction in the bundle of documents before the tribunal) and not to the Landlord. They argue that the Respondents have not explained how a payment made directly to the agent represented compensation for a loss allegedly suffered by the Landlord. The relevant legal provisions[13]Under section 1(1) of the 2019 Act, ‘a landlord must not require a relevant person to make a prohibited payment to the landlord in connection with a tenancy of housing in England’.[14]Under section 1(2) of the 2019 Act, ‘a landlord must not require a relevant person to make a prohibited payment to a third party in connection with a tenancy of housing in England’.[15]Under section 2(1) of the 2019 Act, ‘a letting agent must not require a relevant person to make a prohibited payment to the letting agent in connection with a tenancy of housing in England’.[16]Under section 2(2) of the 2019 Act, ‘a letting agent must not require a relevant person to make a prohibited payment to a third party in connection with a tenancy of housing in England’.[17]Section 1(9) of the 2019 Act states that ‘In this Act “relevant person” means … a tenant …’.[18]Under section 3(1) of the 2019 Act, ‘For the purposes of this Act a payment is a prohibited payment unless it is a permitted payment by virtue of Schedule 1’. Schedule 1 then duly lists all the permitted payments.[19]Under section 15(1) of the 2019 Act, ‘Subsection (3) applies where –(a) a landlord or a letting agent breaches section 1, 2 or 5A as a result of which the landlord or letting agent … receives a prohibited payment from a relevant person, and(b) all or part of the prohibited payment has not been repaid to the relevant person’. 5[20]Under section 15(3), ‘The relevant person may make an application to the First-tier Tribunal for the recovery from the landlord or letting agent of –(a) if none of the prohibited payment or holding deposit has been repaid to the relevant person, the amount of the prohibited payment or holding deposit;(b) if part of the prohibited payment or holding deposit has been repaid to the relevant person, the remaining part of the prohibited payment or holding deposit”.[21]Under section 15(6), ‘Subsection (3) does not apply in relation to a prohibited payment or holding deposit if or to the extent that, with the consent of the relevant person –(a) the prohibited payment or holding deposit, or the remaining part of it, has been applied towards a payment of rent under the tenancy, or(b) the prohibited payment or holding deposit, or the remaining part of it, has been applied towards the tenancy deposit in respect of the tenancy’. Tribunal’s analysis[22]On the basis of the evidence before us we are satisfied that at the relevant time the Applicants were a “relevant person” for the purposes of the 2019 Act, and this is not disputed by the Respondents.[23]As noted above, under section 3(1) of the 2019 Act, a payment is a prohibited payment unless it is a permitted payment by virtue of Schedule 1. Schedule 1 then categorises and lists all the permitted payments. The categories of permitted payment, each with their own limitations, are as follows:(i) rent,(ii) increased rent,(iii) tenancy deposit,(iv) holding deposit,(v) payment in the event of a default,(vi) payment on variation, assignment or novation of a tenancy,(vii) payment on termination of a tenancy,(viii) payment in respect of council tax,(ix) payment in respect of utilities etc,(x) payment in respect of a television licence and(xi) payment in respect of communication services.[24]The payment being challenged in this case does not fit any of the categories numbered (i) to (vi) or (viii) to (xi) above, and the Respondents have not sought to argue otherwise. That just leaves the category labelled “payment on termination of a tenancy”. The paragraph dealing with payments on termination of a tenancy is paragraph 7 of Schedule 1, which reads as follows:[25]7(1) A payment is a permitted payment if it is a payment to a landlord in consideration of the termination of a tenancy at the tenant's request—(a) in the case of a fixed term tenancy, before the end of the term, or 6(b) in the case of a periodic tenancy, without the tenant giving the period of notice required under the tenancy agreement or by virtue of any rule of law. (2) But if the amount of the payment exceeds the loss suffered by the landlord as a result of the termination of the tenancy, the amount of the excess is a prohibited payment. (3) A payment is a permitted payment if it is a payment to a letting agent in consideration of arranging the termination of a tenancy at the tenant's request— (a) in the case of a fixed term tenancy, before the end of the term, or (b) in the case of a periodic tenancy, without the tenant giving the period of notice required under the tenancy agreement or by virtue of any rule of law. (4) But if the amount of the payment exceeds the reasonable costs of the letting agent in respect of the termination of the tenancy, the amount of the excess is a prohibited payment. (5) In this paragraph “fixed term tenancy” means any tenancy other than a periodic tenancy.[26]It is not wholly clear whether the parties have each proceeded on the basis that the payment was a payment to the landlord (under paragraph 7(1)) or to the letting agent (under paragraph 7(3)). We shall consider each in turn.[27]If the payment was a payment to the Respondents as letting agent, which is what both parties appear to be saying, then under paragraph 7(3) it must be “a payment to a letting agent in consideration of arranging the termination of a tenancy”, and under paragraph 7(4) the amount of the payment must not exceed “the reasonable costs of the letting agent in respect of the termination of the tenancy”. The first problem with this from the Respondents’ perspective is that there is no evidence that this was a payment “in consideration of arranging the termination of a tenancy”. On the contrary, the Respondents do not even seek to argue that this was the purpose of the payment and nor have the Respondents adduced any evidence linking the sum demanded by the Landlord on their behalf to the arrangement of the termination of the tenancy. In our view, what paragraph 7(3) has in mind is reimbursement of actual costs incurred by the letting agent, for example in arranging for the premises to be put back in good order and ensuring that the tenant has fully vacated. 7[28]The second problem is that under paragraph 7(4) the payment may not exceed “the reasonable costs of the letting agent in respect of the termination of the tenancy” and there is no proper evidence before us as to what reasonable costs (if any) the Respondents may have incurred. There is therefore no basis, on the evidence before us, to conclude that the sum of £5,662.16 is representative of the reasonable costs (if any) incurred by the Respondents.[29]If, contrary to what both parties appear to be saying, the payment was a payment to the Landlord, perhaps to compensate it in respect of commission already paid out to the Respondents, then the relevant provisions are paragraphs 7(1) and 7(2).[30]Under paragraph 7(1), to be permitted a payment must be “a payment to a landlord in consideration of arranging the termination of a tenancy” and under paragraph 7(2) it must not exceed “the loss suffered by the landlord as a result of the termination of the tenancy”. Here, loss suffered as a result of the termination of the tenancy might typically (although not necessarily only) be loss of rent as a result of a time lag in finding a replacement tenant and/or not being able to let the premises to the new tenant at as high a rent as the original tenant was paying. But the evidence before us is that the Applicants were replaced immediately and at exactly the same rent as they had been paying themselves.[31]In addition, the Respondents have struggled to explain the precise basis on which the Applicants were required to pay the sum of £5,662.16. The contractual basis is clear; it is set out in the Deed of Surrender. But that by itself does not mean that the payment was a permitted payment under the 2019 Act and, as noted by the Applicants, the Respondents have not demonstrated that this sum represents an actual loss. The Respondents have produced no documentary evidence of the agency agreement relied upon or of the basis upon which the alleged loss arose, and nor have they provided any analysis as to why the amount represents actual loss suffered by the Landlord.[32]Furthermore, the evidence indicates that the £5,662.16 was paid directly to the Respondents and not to the Landlord, and the Respondents have failed to explain how a payment made directly to them represented compensation for a loss allegedly suffered by the Landlord.[33]It might have been possible for the Respondents and/or the Landlord to charge some amount to the Applicants in connection with the termination of the Tenancy Agreement if they had provided proper evidence of actual loss suffered as a result of the termination of the Tenancy Agreement (in the case of the Landlord) or evidence of reasonable costs in consideration of arranging the termination of the 8 Tenancy Agreement (in the case of the Respondents) but no such evidence has been provided.[34]Accordingly, the whole of the sum of £5,662.16 must be paid by the Respondents to the Applicants. Costs[35]There have been no cost applications, i.e. no separate cost applications on top of the application for repayment of a prohibited payment. Name: Judge P Korn Date: 21 July 2026 RIGHTS OF APPEALa. A. If a party wishes to appeal this decision to the Upper Tribunal (Lands Chamber) a written application for permission must be made to the First-tier Tribunal at the regional office dealing with the case.b. B. The application for permission to appeal must arrive at the regional office within 28 days after the Tribunal sends written reasons for the decision to the person making the application.c. C. If the application is not made within the 28 day time limit, such application must include a request for extension of time and the reason for not complying with the 28 day time limit; the Tribunal will then look at such reason and decide whether to allow the application for permission to appeal to proceed despite not being within the time limit.d. D. The application for permission to appeal must identify the decision of the Tribunal to which it relates (i.e. give the date, the property and the case number), state the grounds of appeal, and state the result the party making the application is seeking.