Section 120: Prohibition of premiums and loans on assignment of protected tenancies., Rent Act 1977

Subject to section 121 of this Act, any person who, as a condition of the assignment of a protected tenancy, requires the payment of any premium or the making of any loan (whether secured or unsecured) shall be guilty of an offence.

Subject to section 121 of this Act, any person who, in connection with the assignment of a protected tenancy, receives any premium shall be guilty of an offence.

Notwithstanding anything in subsections (1) and (2) above, an assignor of a protected tenancy of a dwelling-house may, if apart from this section he would be entitled to do so, require the payment by the assignee or receive from the assignee a payment—

of so much of any outgoings discharged by the assignor as is referable to any period after the assignment takes effect;

of a sum not exceeding the amount of any expenditure reasonably incurred by the assignor in carrying out any structural alteration of the dwelling-house or in providing or improving fixtures therein, being fixtures which, as against the landlord, he is not entitled to remove;

where the assignor became a tenant of the dwelling-house by virtue of an assignment of the protected tenancy, of a sum not exceeding any reasonable amount paid by him to his assignor in respect of expenditure incurred by that assignor, or by any previous assignor of the tenancy, in carrying out any such alteration or in providing or improving any such fixtures as are mentioned in paragraph (b) above; or

where part of the dwelling-house is used as a shop or office, or for business, trade or professional purposes, of a reasonable amount in respect of any goodwill of the business, trade or profession, being goodwill transferred to the assignee in connection with the assignment or accruing to him in consequence thereof.

Without prejudice to subsection (3) above, the assignor shall not be guilty of an offence under this section by reason only that—

any payment of outgoings required or received by him on the assignment was a payment of outgoings referable to a period before the assignment took effect; or

any expenditure which he incurred in carrying out structural alterations of the dwelling-house or in providing or improving fixtures therein and in respect of which he required or received the payment of any sum on the assignment was not reasonably incurred; or

any amount paid by him as mentioned in subsection (3)(c) above was not a reasonable amount; or

any amount which he required to be paid, or which he received, on the assignment in respect of goodwill was not a reasonable amount.

Notwithstanding anything in subsections (1) and (2) above, Part I of Schedule 18 to this Act shall have effect in relation to the assignment of protected tenancies which are regulated tenancies in cases where a premium was lawfully required or received at the commencement of the tenancy.

A person guilty of an offence under this section shall be liable to a fine not exceeding level 3 on the standard scale.

The court by which a person is convicted of an offence under this section relating to requiring or receiving any premium may order the amount of the premium, or so much of it as cannot lawfully be required or received under this section (including any amount which, by virtue of subsection (4) above, does not give rise to an offence), to be repaid to the person by whom it was paid.

Section 120: Prohibition of premiums and loans on assignment of protected tenancies.

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