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Tenancy agreement (through the Estate agent) to a private one


Mitul

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Hello,

I would be very greatful if you could help me, i'm in a bit of tight spot.

I purchased a property last year which i intended to put on rent, i thought seeing as i am new to the property market i would go through an estate agent in the first year. So the agent found tenants which i was happy with and now it is coming up to the end of the tenancy agreement (12 month period).

As you know estate agent fees are ridculously high and don't reflect the work that they actually do. I was very happy with the tenant that the agent found and wanted him to continue, BUT not going through the agent, i wanted to draw up a private tenancy agreement.

Now i was told by my agent that if the tenant chooses to stay that i would have to pay another set of fees for the new contract.

I was under the impression that all i would have to do is to get the tenant to terminate the contract (the one drawn up by the agent). Then i could start a new fixed contract with the tenant (this time not going through the agent and thus not having to pay the fees)

Is this the right course of action to take, all i want to basically do is remove the agent from the scenario and continue to let the property to my existing tenant.

If the tenant terminates the contract, which gives the impresion that they will be leaving the property (but really intend to stay and start a new private contract with me) can the agent do anything to stop this?

thank you for your help

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Some Agents charge a finders fee only.......and that's that.

Your Agent is charging you a finders fee and hoping to cash-in on a future Tenancy Extension which Letting Agents do.

It is a rip off but unfortunately a lot of Letting Agents do not advise Landlords of this double whammy that is going to hit them.

You need to read the small print in the contract and unless it specifically states payment is required for Tenancy extensions then you are under no obligation to pay any further money to your Agent as you may assume it was a one off payment to find your Tenant.

Mel.

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Some Agents charge a finders fee only.......and that's that.

Your Agent is charging you a finders fee and hoping to cash-in on a future Tenancy Extension which Letting Agents do.

It is a rip off but unfortunately a lot of Letting Agents do not advise Landlords of this double whammy that is going to hit them.

You need to read the small print in the contract and unless it specifically states payment is required for Tenancy extensions then you are under no obligation to pay any further money to your Agent as you may assume it was a one off payment to find your Tenant.

Mel.

Thank you for your help, i have requested a copy of the terms and conditions from my agent. I will let you know how i get on.

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Hi Mitul,

This might be controversial - but I am going to side with the letting agent - which is unusual for me as I never side with the letting agent !!

The fact is that the letting agent introduced you to your tenant. Without the letting agent you would not have found your tenant. The tenant is a client of your letting agents. It is not fair to cut them out of the loop now.

Most letting agent contracts will state that if the tenant rents the property directly from you - or if the tenant introduces somebody else who rents the property from you - or if the tenant actually buys the property from you - then you will have to pay them more fees. This is reasonable. They are trying to run a business.

I understand that you want to try and avoid the letting agent fees but you do need to tread carefully as you do not want to upset / unsettle your tenant during this tenancy extension process.

If your tenant leaves because of the argument between you and the letting agent .. you will probably lose more money in the ensuing void period (whilst you or the letting agent or both of you look for a new tenant) than the fee that the letting agent wanted in the first place !

My advice is "don't be greedy" and try and reach a compromise with the letting agent.

If you didn't want to use a letting agent you should have let the property yourself in the first place !!

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Mitul, check your contract with the agent re termination clause. It's the landlord who is the agent's client and the tenant is the consumer and you have a right to terminate iaw contract. Fairness isn't an issue. You have paid the agent for finding the tenant with the initial letting fees so job done. Thereafter, you only pay for the service being provided at the time. The tenancy agreement drawn up by the agent, but paid for by you, is between landlord & tenant. Ending the management agreement does not end the tenancy agreement.

If OK to terminate contract, give agent correct notice and write to your tenant advising them what you are doing, set up new payment arrangements and re-assure them you will not ask them to leave. The tenant however, may vote with his feet and decide to leave but a gamble you take. If the tenant buys the property from you while under management you do not have to pay the agent anything regardless of what might be in the contract. You would only pay something to the agent if they subsequently provided a service to facilitate change of ownership under negotiated terms (as announced in High Court ruling). Similarly, other fees in the management contract may actually constitute Unfair Terms, so take separate advice if necessary.

If your property is tenanted under a tenant-find service or full management and the agent provides you with a tenancy related service such as providing a new fixed contract, taking up the agent's time & resources, expect to pay a fee. The agent should consult with you beforehand. However, depending on your contract, the choice is yours whether or not to take that service. Bottom line, check your management agreement for conditions. A good agent will accept this and thank you for your business if you decide to end the arrangement.

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Ok i have got the contract between me (the landlord) and the letting agent.

_____________________________________________________________

We hereby agree to instruct [name of the letting agent] to market the property for LETTING AND

TO FIND A TENANT ONLY BASIS.

Should [name of the letting agent] introduce a suitable tenant with which you proceed to a

tenancy assignment, then the agreed commission figure of 8% of the passing rent for the first

one year, plus VAT. The second year and subsequent years commission will be 8% + VAT.

Each year or each six months the contract will be renewed our fee will be applicable. If the

landlord agrees to leep the tenant without further contracts our fee will still be applicable.

The landlord will retain the deposit of the tenant.

Commission is charged to the landlord on a six month/ yearly basis depending on the length of

the agreement which shall become payable in advance upon the tenants monving in.

then goes on state the terms if the tenant decides to leave etc

_________________________________________________________________

The property is in mothers name, but i was with her when we first signed all the paperwork and i

don;t recall her signing anything like this. But thats now irrelevant because i don;t think they

would have proceeded with the tenancy without signing some sort of agreement between the

landlord and the agent.

the first two lines of the contract i find interesting as it clearly states "letting and to find

a tenant only basis". I have read the comments that Paul_f has made and as he states if this is

the case then the contract ended when the tenants moved in.

This seems to me like a clear example of unfair terms in a contract. I will contact my local

Trading Standards office and try to speak to them. All the agent did was find the tenant and yet

they are demanding ridiculous fees for doing nothing.

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Mitul,

Well I think you are being greedy. If the letting agent "does nothing" then why did you appoint them in the first place, why did you agree to their contract of engagement either verbally or in writing and - quite simply - why didn't you go and find a tenant yourself.

No-one forced you to agree to these "unfair terms", if indeed they are unfair given that the majority of High Street letting agents use the same term.

You were quite happy to agree to the terms when your property was empty, tenantless and earning you no money .... but it seems a different story now that you've got a tenant and the money is rolling in.

I hope this ends up in court and you lose ........ there is nothing worse than a greedy landlord.

Mark

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I agree that it is a bit of a rip of but as Trenners says, the terms and conditions were signed up to.

Basically if anybody is stupid enough to give money away to Letting Agents on these terms then they deserve what they get. My message is don't let the Lettings Agents take the mick, check all the documents, if you are not happy, don't sign it, it is more than likely they will change it.

Lettings Agents are like Banks they make money on all the hidden extras for doing absolutely nothing.

I agree with Pauly, Letting Agents tend to take longer to get Tennants (so more voids) and get less money for the properties and then charge you a fee for this.

It is total madness.

With the Internet and the housing problem in the UK, finding Tenants is not difficult, so why pay for it?

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I have never had a contract like this in 17 years of letting out property and nor would I ever sign up to one on these terms.

I have always paid a "One Off" fee up front for Tenant finding only and currently that has worked out for my last Tenant at £375 plus VAT. (£440).

To be expected to cough up £440 every 6 Months is ridiculous on a rolling continuity basis just because the same Tenant has decided to stay on for longer.

Like I said, I have never had to concern myself with this problem and I reckon I have used at least 8 Letting Agents over the years from the big to the small and non of them have ever asked for more than an initial finders fee.

I have even just had a re-read of my last 2 Contracts with Major Letting Companies based here in Swindon and sure enough there is absolutely no mention of any further charges for continuing Tenants.

As you never stop learning in this Letting Game I shall be very vigilant (if I have to) to make sure that this type of contract is not signed up to by me!

However Mitul. if you have signed up to this contract then you are going to have a problem in not actually honouring it as laid down in the conditions that you have signed up for.

I don't think you will make this type of mistake in the future.

Mel.

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