A landlord has been ordered to pay two former tenants £2,252 after a judge ruled that his letting agent agreement contravened the Tenant Fees Act.

The tenants signed an assured shorthold tenancy on a flat in Wentworth Street, London (main image), in July 2023 for 24 months with a break clause at 12 months, paying £2,800 a month, a First Tier Property Tribunal heard. They requested an early termination in November and had to pay £3,577 to the agent/landlord.

Letting agent Winkworth Shoreditch’s contract outlined: “The rent achieved from new tenants may be lower than the £2,800pcm you pay currently and so you would be required to compensate up to this amount depending on the rent achieved from the new tenants.”

It said the fee was calculated at £1,881 for seven months’ remaining tenancy, at £268 a month, as well as admin and referencing costs of £375. A new tenancy began on 15th December at a monthly rent of £2,600 - £200 lower than the former tenants’ £2,800 rent.

They argued that the amount claimed by the landlord and agent were excessive and prohibited under the Act.

The judge ruled that the landlord’s loss of letting fees was essentially a ‘double recovery’ as the payment could reasonably be transferred to the new letting of the premises and did not represent a genuine loss. He said the tenants should not be liable for the loss to the landlord for the lower rent charged to the new incoming tenants.

“Having accepted an early termination of the tenancy, the landlord is liable to mitigate his losses,” the judge added. “The applicants cannot be held responsible for the alleged changes in the letting market. Arguably, had the landlord been able to let the subject property for more than the £2,800 pcm, they might argue they should have been entitled to receive the difference.”

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