Breaking away from a letting agent

[ARD]

Hi,

I have been renting my 2 bedroom flat through an agent, to the same tenant for the past 3 years, paying 12.5 % commission for full management. I have now decided to handle the management of the flat myself. The agent insists on taking 4% commission per month for as long as the tenant occupies my flat, as the agent says that they found me the tenant and that I am continuing to benefit from the tenant they found me.

The agent holds the deposit of almost £1000.

Thank you for any advice you may give me,specifically around whether the agent can keep taking this commission.

The tenant is willing to deal with me directly.

Thanks.

[Mortitia]

Hi ARD,

You need to go back to your original tenancy agreement with the agent/tenant. It probably says he has a right to take 4% for the life of the tenancy or he would not be insisting on it.

How to get out of it - well you could ask the tenant to give notice and vacate, maybe to another of your properties or at a time when he was due to go on holiday, then move back in again but that is a lot of hassle and you would have to pay his expenses. You will also need to check there is not a clause covering this in the AST. A very annoying situation to be in but one you let yourself in for at the outset. Most tenancies don't go on as long as 4 years so you are lucky in that respect.

Mortitia

[Trenners]

Hi ARD,

I think you need to check the terms of business that you signed when you instructed the letting agent. It should be very clear on what happens if either party wishes to terminate the agreement.

You then need to decide whether the terms are fair under European law. So, assuming you signed up to allowing the agent to charge you 4% for life, no doubt hidden in the small print, there would be a good legal argument to suggest that these were "unfair terms" and not enforceable.

However, I am not a fan of "going legal" with anyone because it is always the lawyers that benefit the most and much prefer compromise.

I would demand a meeting with the letting agent manager to discuss how you are going to terminate the contract (between yourself) to mutual satisfaction.

Make it clear that you will be taking back the management of your property and also make it clear that 4% for life is not a fair compromise and you will not be paying this (and are prepared to defend yourself - with maximum publicity - in the Small Claims Court).

In the spirit of goodwill and partnership - I would offer a one-off fee of £100 to the letting agent as a goodwill payment for handing the tenant and the security deposit over to you. You don't really want to end a great business relationship with bad feeling do you?

I know - as other will no doubt advise - you don't need to give this letting agent ANYTHING but, in the future, you might need his services again .... and a tax deductable £100 would surely be a good business insurance policy for the future ..... good letting agents are hard to come by (as others will testify as well).

Mutuality is a great business principal and great businesses (such as Mars Confectionery) have been built successfully on this principal.

I don't expect everyone (or anyone) on this forum to agree with what I suggest ...... but that is what I would do and I would feel that was a fair compromise!

Good luck,

Mark

[Preston]

Hi

I definitely agree with the comment that negotiated settlements are nearly always the best. To help in negotiations, its always good to be clear on your legal position.

The agreement you have signed with the letting agent is by far the most important guide to your position. It would be interesting to hear what it says.

But just to emphasise the potential importance of the Unfair Contract Terms Act issue referred to by Trenners, here's an extract from a recent article about some action being taken by the Office of Fair Trading.

"The OFT has issued High Court proceedings against Foxtons Limited seeking a declaration on the application of the Unfair Terms in Consumer Contract Regulations 1999 (UTCCRs) to certain terms in Foxtons' lettings agreements with landlords. The OFT is also seeking an injunction against Foxtons preventing it from using the terms.

The action taken by the OFT is in response to consumer complaints. If successful in this case the OFT intends to enforce compliance with the law, as declared by the Court, throughout the letting industry wherever similar terms are being used.

The terms to which the OFT objects in Foxtons' letting agreements can potentially require landlords to pay Foxtons substantial sums in commission, where a tenant continues to occupy the landlord's property after the initial fixed period of the tenancy has expired - even if Foxtons plays no part in persuading the tenant to stay, and no longer collects the rent or manages the property. Foxtons' terms can also require the landlord to pay these sums after the landlord has sold the property. The terms also demand commission where the landlord sells the property to the tenant, even where Foxtons has played no part in negotiating that sale.

Foxtons contends that its agreements with landlords are not unfair and continues to use these terms, and accordingly, the OFT has issued proceedings so the courts can decide the matter."

This case doesnt deal with exactly the same issue that you have raised, but it might just make your agents more willing to negotiate.

Good luck

Preston

[ARD]

Thanks a lot, appreciate the advice

Hi ARD,

You need to go back to your original tenancy agreement with the agent/tenant. It probably says he has a right to take 4% for the life of the tenancy or he would not be insisting on it.

How to get out of it - well you could ask the tenant to give notice and vacate, maybe to another of your properties or at a time when he was due to go on holiday, then move back in again but that is a lot of hassle and you would have to pay his expenses. You will also need to check there is not a clause covering this in the AST. A very annoying situation to be in but one you let yourself in for at the outset. Most tenancies don't go on as long as 4 years so you are lucky in that respect.

Mortitia

[ARD]

Thank you very much

Hi

I definitely agree with the comment that negotiated settlements are nearly always the best. To help in negotiations, its always good to be clear on your legal position.

The agreement you have signed with the letting agent is by far the most important guide to your position. It would be interesting to hear what it says.

But just to emphasise the potential importance of the Unfair Contract Terms Act issue referred to by Trenners, here's an extract from a recent article about some action being taken by the Office of Fair Trading.

"The OFT has issued High Court proceedings against Foxtons Limited seeking a declaration on the application of the Unfair Terms in Consumer Contract Regulations 1999 (UTCCRs) to certain terms in Foxtons' lettings agreements with landlords. The OFT is also seeking an injunction against Foxtons preventing it from using the terms.

The action taken by the OFT is in response to consumer complaints. If successful in this case the OFT intends to enforce compliance with the law, as declared by the Court, throughout the letting industry wherever similar terms are being used.

The terms to which the OFT objects in Foxtons' letting agreements can potentially require landlords to pay Foxtons substantial sums in commission, where a tenant continues to occupy the landlord's property after the initial fixed period of the tenancy has expired - even if Foxtons plays no part in persuading the tenant to stay, and no longer collects the rent or manages the property. Foxtons' terms can also require the landlord to pay these sums after the landlord has sold the property. The terms also demand commission where the landlord sells the property to the tenant, even where Foxtons has played no part in negotiating that sale.

Foxtons contends that its agreements with landlords are not unfair and continues to use these terms, and accordingly, the OFT has issued proceedings so the courts can decide the matter."

This case doesnt deal with exactly the same issue that you have raised, but it might just make your agents more willing to negotiate.

Good luck

Preston