Julian Posted April 16, 2011 Report Share Posted April 16, 2011 Hi all I know this has been covered on other posts but some got a bit heated so I wanted to start a new thread. We live overseas and have one house in the UK which has been managed through an agency for 2 years. On three occasions, I have had to write more than one email to the agent to ask them to respond to problems the tenant had been having. I do not know the tenant personally but living overseas I felt it important to at least supply them with my contact details. These were not trivial matters eg being without heating during the cold snap in December. The agency is highly unresponsive and I basically do not trust them. The contract with the agency is up for renewal in June and I want to terminate that and manage the property myself with the current tenant who is a model tenant. The tenant is comfortable with this proposed arrangement. Can anyone give me any advice or suggestions as to my situation? All gratefully received! Thanks Julian Link to comment Share on other sites More sharing options...
Julian Posted April 16, 2011 Author Report Share Posted April 16, 2011 PS Sorry, I should have included the contract phrasing as it seems ambiguous: 'in the event that at the end of the original term the tenancy is not formally renewed and the tenant holds over, you shall pay us a fee based on the original fee option'. Is the 'original fee option' the letting plus management fee? And has anyone any experience of what is meant by the phrase 'based on' the fee option? I would add that the current tenant is a friend of the previous tenant and the agency did not find them for us, if that is relevant. Thanks again Link to comment Share on other sites More sharing options...
Melboy Posted April 17, 2011 Report Share Posted April 17, 2011 Well my general thoughts about your situation are........ If the LA never put your replacement tenant into your property how was this handled by them? and by that I mean who raised the new contracts and credit searches etc. If your 2 year contract is up then that should be that as far as payment goes. If you have received bad service from your LA did you notify them in writing that the service you were receiving was not up to a standard expected? Who is holding the deposit? and do you have a deposit reference number? You could ensure that the tenant pays you directly from end of contract and then let matters take their course with the LA who in all probability will send you letters requesting payment etc. and then legal letters etc.for non-payment but you could just ignore them as they would hold little or no weight in Court but you would have to have good evidence that the LA failed in a duty of care to your tenant whilst being paid for providing that service on your behalf. Mel. Link to comment Share on other sites More sharing options...
Julian Posted April 17, 2011 Author Report Share Posted April 17, 2011 Hi Mel Thanks for your quick reply! I'll keep this brief: 1) The agent did organise the contract and credit search for the tenant - I didn't mean to imply that wasn't the case. My point was that the new tenant was recommended by the previous exiting tenant and therefore no costs etc were incurred in terms of advertising, showing prospective tenants around etc. Maybe that's not very important. 2) I am just confused by the wording in the contract with the agents relating to an unspecified 'fee based on the original fee option' which apparently comes into play if the existing tenant stays and I don't renew the agents' contract. It seems like it will be a bit of a bluffing game as there is no indication as to what this fee would be. Any experiences on this? 3) I've got copies of emails going back two years now relating to poor management, basically indicating a lack of response to tenants' needs and poor communication between the central agency phonecentre and provincial agent representatives. Three instances spring to mind which I have email records relating to. 4) The deposit is with the TDS. I appreciate your concluding thoughts - that's what I was thinking too. The last thing I want to do is inconvenience the tenant but hopefully that won't happen. I think some legal advice is needed but any other experiences of what agents have done in this situation would be most welcome! Thanks again Julian Link to comment Share on other sites More sharing options...
Melboy Posted April 17, 2011 Report Share Posted April 17, 2011 1. The LA will regard this tenant as "their tenant" as they have carried out credit searches etc. 2.The LA cannot charge you a new tenancy contract fee if the same tenant is in occupation and nothing has changed by way of circumstances. (Google Foxtons Law Case... they lost!) 3. You have a record of emails which is good but letters of complaint with your copy held is better. 4. Noted. Mel. Link to comment Share on other sites More sharing options...
Trenners Posted April 17, 2011 Report Share Posted April 17, 2011 Hi Julian, Here are my thoughts (which differ slightly from Melboys) <grin> 1) The original tenant introduced the current tenant. You would not have found the current tenant had the agency not introduced the original tenant. Most LA contracts cover this point by saying that fees are payable whether the tenant is found by them or the existing tenant - if that makes sense. 2) Your situation is made more complicated as you are an overseas landlord. If you start to manage this tenancy yourself then YOUR TENANT is going to be held responsible for your tax affairs. If you have not received dispensation from HMRC to receive your rental income without UK tax being deducted ..... then YOUR TENANT is going to have to submit your tax (due on the rent less allowable expenses) to HMRC on a quarterly an annual basis. 3) If you do have HMRC dispensation to receive rent without the deduction of income tax then this authority will need to be changed so that HMRC are clear that the tenant will be paying the rent without deducting tax directly to you. You will need to contact them to sort this out. 4) If you have cause to terminate the contract with the LA (due to poor service etc etc) then you should formally write to the agent - stating your reasons for termination - and then you should terminate. HOWEVER - if you do not have cause to terminate (in other words - you are only ending the agreement to save yourself a few pounds in agency management charges) - you will probably feel the full weight of the LA solicitor as you are clearly going to be in breach of contract. 5) If you do not have cause to terminate but you really really want to "dump the LA" - then you should end the tenancy, evict the tenant .... and then start again by finding your own, NEW, tenant. I suspect you do not want to do this though because - as you say - you have a model tenant. In summary, the tax situation and the fact you have a model tenant would make me want to stay with the current LA ... although I would probably give them a "strong telling off" and I would be making it clear that I would be terminating with due cause if I get anymore problems with them in the future ..... Hope that helps .... Mark Link to comment Share on other sites More sharing options...
Julian Posted April 18, 2011 Author Report Share Posted April 18, 2011 Hi again Thanks very much for that Mark and Mel - the difference of opinions is interesting as that may indicate this is more of a grey area than a simple yes/no situation. Just to cover a couple of your points Mark - the HMRC stuff is all sorted, that's fine but thanks for the heads up on notifying them too. To be honest, my desire to not renew the contract (it's not an early termination as such) is a combination of annoyance, frustration and the belief that I can work with the current tenant. I can't deny there's a financial aspect to the decision, obviously, but their history of letting me and the tenant down doesn't fill me with confidence that they would be any better if I did do as you suggest. Living overseas means you only get to hear about a problem when the tenant decides to contact you - and that only happens when they are sick of not getting a response from the agent. I don't think I am in breach of contract - the situation whereby the contract may not be renewed but the tenant 'hangs over' is specifically mentioned in the contract - but the outcome of that (ie pay a proportion of the option fee) is very vague and that was the reason for my question in the first place. Mel - my reading of the Foxtons case was that they were in breach because they had not specifically highlighted the renewal fees (that's what Lettingfocus.com seemed to imply to me). My agents are not culpable in that sense - the renewal fee is clearly outlined. I only have emails to the agents because of living overseas but I would hope they would be equally significant as a written letter if it came to that. Thanks! Julian Link to comment Share on other sites More sharing options...
Melboy Posted April 18, 2011 Report Share Posted April 18, 2011 Julian....... There is no requirement for a renewal fee of an existing AST contract if the circumstances of tenant and contract remain unchanged. This was the essance of the Foxton's court case. Foxton's were wanting to charge more fees for work already done like every 6 months at the end of the AST and then trying to issue a new AST and charging high fees for doing so. They lost the argument and the case. It matters not what the small print states in your contract about renewal fees as a lot of LA's try this one on and basically it is illegal. Mark..... Provided the Landlord is registered with HMRC then the tenant will have no involvement in a Landlord's tax affairs. The HMRC formulae for calculating an overseas Landlord tax implications is quite involved and it is normally sorted out once that landlord returns to the UK. As Julian has said he is already registered for tax purposes so it sould be an uncomplicated issue for him. Link to comment Share on other sites More sharing options...
Trenners Posted April 18, 2011 Report Share Posted April 18, 2011 Hi Julian, With the HMRC situation sorted .... it should be straightforward to "dump the agent" ... but I would still be worried that you would be in breach if you terminated "at the end of the contract" ... as the tenant will be remaining in the property beyond termination ... and you would be terminating without cause. In this situation, it is usual for the LA to demand that all fees continue to be paid until the end of the tenancy (ie: when the tenant leaves). Having said that .... you should be able to negotiate with the LA and agree a sum to enable you to "buy out" the contract .... a sum equal to 3 months fees is usual ... but it is really for the LA to agree! Mark Link to comment Share on other sites More sharing options...
Julian Posted April 18, 2011 Author Report Share Posted April 18, 2011 Hi again Thanks very much for your prompt replies and time in doing this - it's much appreciated! I wasn't aware of that aspect of the Foxton's case so I'll certainly bear that in mind as this situation develops and will use it when I can! I think I do have a case for 'just cause' when terminating this contract although I am expecting them to come down hard at first but I have material to use against them. I've been in a similar situation as a tenant in Australia and it was surprising how much an initially aggressive party will back down when they see that you aren't going to roll over. But thanks again for your advice and thoughts - I didn't expect so much help in a short time so am very grateful! Will update you as this develops, which I feel could be protracted...! best wishes Julian Link to comment Share on other sites More sharing options...
Mortitia Posted April 19, 2011 Report Share Posted April 19, 2011 Hi Julian et al, Leaving the HRMC thing aside and having made sure the tenant's new direct debit was in place I would just dump the agent by letter and see what he does. It seems you have a good case for getting rid of him so wait for his re-action (if any) and take it head on. I think the least you will get away with is a one off payment to him to end things but negotiate it to be as little as possible. We wait to hear. Mortitia Link to comment Share on other sites More sharing options...
Julian Posted April 20, 2011 Author Report Share Posted April 20, 2011 Hi Mortitia Thanks for that - seems like sound advice. I'll keep you posted... cheers! Julian Link to comment Share on other sites More sharing options...
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