Letting Agent Renewal Fees.

[janeiro]

Dear All,

I have used a local estate agent to find a tenant for my flat; the tenancy agreement was for 2 years and is now about to expire. I do manage the property directly and collect the rent directly form the tenant. The estate agent involment ended at the beginning of the tenancy (he provided the agreement, the reference checks, and obviously introduction), although I did pay a fee for the whole two year period. I did sign originally the agent's tterms and conditions, which provide for an 8% renewal fee, however there is no mention of any lenght of time during which such renwal fees might be due.

My question are:

1)if I renew the agreement directly with the tenant, without the agent getting involved, am I still liable to pay his renewal fee?

2) Is it necessary (or adivesed) to sign a new agreement, assuming neither me nor the tenant are particularly worried about having a minimum period of 6 months? Assuming the Tenant stays on with the old contract, can I just increase the rent with a side letter? Am I liable to pay the agent's renewal fee in this case?

Many Thanks

Janeiro

[Richlist]

1)if I renew the agreement directly with the tenant, without the agent getting involved, am I still liable to pay his renewal fee?

Yes you probably are if you signed the agents terms and conditions.

2) Is it necessary (or adivesed) to sign a new agreement, assuming neither me nor the tenant are particularly worried about having a minimum period of 6 months?

No its not necessary.

assuming the Tenant stays on with the old contract, can I just increase the rent with a side letter?

Yes by mutual agreement.

[Carryon Regardless]

You can increase rent as RL says or issue a section 13 notice to inform of a rent increase 1 month later.

[janeiro]

1)if I renew the agreement directly with the tenant, without the agent getting involved, am I still liable to pay his renewal fee?

Yes you probably are if you signed the agents terms and conditions.

2) Is it necessary (or adivesed) to sign a new agreement, assuming neither me nor the tenant are particularly worried about having a minimum period of 6 months?

No its not necessary.

assuming the Tenant stays on with the old contract, can I just increase the rent with a side letter?

Yes by mutual agreement.

[janeiro]

2) Is it necessary (or adivesed) to sign a new agreement, assuming neither me nor the tenant are particularly worried about having a minimum period of 6 months?

No its not necessary.

assuming the Tenant stays on with the old contract, can I just increase the rent with a side letter?

Yes by mutual agreement.

and in this case I am not liable to pay any renewal fees to the agent, right?

[Richlist]

No thats wrong.

Usually, if you keep the tenantt that the agent found then you have to pay the agents fees.

Just find a new/ your own tenant and the agent will leave you alone.

[janeiro]

I would really like to keep the same tenant, as he's a very good one, especially compared to the previous one.

Someone suggested to ask the tenant to leave the flat for 1 day (apparently he can leave his stuff inside) and then sign a new contract, so that it cannot be considered a renewal and no renewal fees woud be due. Would that work in your opinion?

[Richlist]

What you are proposing is not appropriate.

If your contract with the agent requires you to pay their fee if you continue with that tenant then thats what you will have to do. You could try all different ways of getting around it but that won't change your responsibilities. The agent will only have to take legal action and present the T & C's you signed showing his entitlement to payment.

So, gonna try and bluff your way thru ? How lucky do you feel ?

[janeiro]

What you are proposing is not appropriate.

If your contract with the agent requires you to pay their fee if you continue with that tenant then thats what you will have to do. You could try all different ways of getting around it but that won't change your responsibilities. The agent will only have to take legal action and present the T & C's you signed showing his entitlement to payment.

So, gonna try and bluff your way thru ? How lucky do you feel ?

[janeiro]

Thank you, I get your point and I do not really feel lucky, so I do not want to try if I am legally bound to pay the fees.

However I beleive the agent's terms and conditions is not very clear: it only shows renewal fees in the fees schedule (as for below) and it does not makes it clear that a renewal fee is due even if the agent is not involved in negotiating a renewal. On the contrary it clearly says the the agent is enntitled to a fee if the flat iis sold to the tenant: "We will also be entitled to a fee of 2% plus VAT of the agreed sale price should the Tenant or any person or company connected to the Tenant (before, during, or after the commencement of the Tenancy), purchase the Landlord’s property." Therefore I would expected that if the agent is entitled to a renewal fee in any case, whether he does any work or not, this would be clearly stated on the terms and conditions; which is not and that's why I am confused.

The Service:

Please tick required service

□ Letting Only Service @ 10% + VAT of the annual rent

Tenant Introduction

□ Management Service @ 16% + VAT of the annual rent

Tenant Introduction, Rent Collection & Management

Property Renewals:

v Letting Only Service @ 8% + VAT of the annual rent

Tenant Introduction

v Management Service @ 14% + VAT of the annual rent

Tenant Introduction, Rent Collection & Management

[LLAW96]

It seems to me like they are entitled to a further fee if you renew albeit at a lower rate than an initial introduction.

[Melboy]

They cannot charge you 2% if you sell the property to the Tenant.

They cannot charge you a renewal fee either for the same tenant in occupation.

Back again to the Foxton's Law Case of 2009 !

http://news.bbc.co.uk/1/hi/business/8144161.stm

Jeez! who trains these LA's ?

[Grampa]

They have been getting away with this for years and will keep trying their luck if they can.

Damn letting agents they are all dodgy;)

[LLAW96]

Agree in relation to the sale, but if you have read the full judgment the you realise that it is not as simple as saying cannot charge a renewal fee.

[janeiro]

I spoke to the agents and told them honestly that I did not want to pay the renewal fees since it was too much for a simple renewal. At first they tried to suggest that I owed the fees anyway and they might sue me, .....not very convincingly though. Later, they came back and offered me 50% discount on the renewal. .........since the offer seems very generous, it makes me think that they would not probably win in court.....

[Richlist]

I think it might be worthwhile looking at the detail of what the agent is proposing.

Lets say the monthly rent is £600 X 12 = £7200

The agents charge is 8% + vat = £691.......50% reduction = £345

So the agent is saving £345..........If they had to take legal action to enforce the contract term it would cost them all of that for a solicitor, time, travel, loss of employee whilst at court etc etc.

So the 50% reduction makes perfect sense.......don't assume that if you don't accept the offer they will drop the whole thing.

[Melboy]

I spoke to the agents and told them honestly that I did not want to pay the renewal fees since it was too much for a simple renewal. At first they tried to suggest that I owed the fees anyway and they might sue me, .....not very convincingly though. Later, they came back and offered me 50% discount on the renewal. .........since the offer seems very generous, it makes me think that they would not probably win in court.....

A lot of LA's are aware of the Foxton's case in law so they don't now bury the detail in the fine print on the contract regarding renewal fees however most LA's I know do not charge a renewal fee after the initial contact time if they are in full management of the Landlord's property.

The Foxton's case will rumble on for years and every landlord new or old should be aware of it when signing up initial contracts.

Mel.

[Grampa]

I think it might be worthwhile looking at the detail of what the agent is proposing.

Lets say the monthly rent is £600 X 12 = £7200

The agents charge is 8% + vat = £691.......50% reduction = £345

So the agent is saving £345..........If they had to take legal action to enforce the contract term it would cost them all of that for a solicitor, time, travel, loss of employee whilst at court etc etc.

So the 50% reduction makes perfect sense.......don't assume that if you don't accept the offer they will drop the whole thing.

Yes but IF they win they should get some costs.

[LLAW96]

Dont forget this would be a small claim in the county court, court fees of about £80-120 in total, no solicitors fees allowed. Worth a punt I would say, you would raise Foxton's and the unfair contract terms in consumer contract regulations, the hearing would be informal you would not give evidence under oath and it would be down to the judge on the day to decide whether the term in the contract is enforceable.

[Richlist]

Yes but IF they win they should get some costs.

There is no guarantee of having costs awarded by a court............and if it was decided to go thru the small claims court there are no costs awarded other than those for bringing the action anyway.

[Richlist]

Dont forget this would be a small claim in the county court, court fees of about £80-120 in total, no solicitors fees allowed. Worth a punt I would say, you would raise Foxton's and the unfair contract terms in consumer contract regulations, the hearing would be informal you would not give evidence under oath and it would be down to the judge on the day to decide whether the term in the contract is enforceable.

That response is made with you wearing your legal hat. If you put your business hat on the issue looks completely different.......

Any organisation taking action or defending it has a whole raft of hidden costs. Someone will have to attend court so, they will not be doing there job. There's the cost of travel. Time and effort will need to be expended in pulling evidence/ docs/ getting the story pulled together and a whole load of other admin tasks. Letting agents have a business to run and court action is costly in time & resource.

No, it makes far more sense for them to forgo £345 and get on with making money thru their core business of lettings.

[Irina]

For me, LAW's caslculations make more sense. In any way, refusing to pay, most probably, will mar your relationship, even if it's a purely businesss one. On the top of that, it's immoral to sign an agreement and then try to wriggle out of it. Did you come to get help with it? Or is it a matter of "all estate agents are rogues" (so you can be roguish to them)?

[Melboy]

About 10 years ago I sold one of my properties to my tenant who had only been in the property for about 4 months. I had paid an LA for tenant finding service only which was about £425 as I recall.

I have to say at the time it never really crossed my mind that I could be possibly be liable to pay 2.5% commission fee to the LA who was also a major EA around my location.

Sure enough I received a bill from them for £4000 plus VAT.

I refused to pay it and initially told them so to which they replied by letter that it was in my contract (in the very small print). I got my contract out and to my amazement there was nothing about LA's fees for selling should the tenant buy the Landlord's property,

So I went into the office and showed them my contract and I asked them to find the clause whereby it states my liability to pay them.

A look of pure abject horror came over the LA manager when he read my contract and he couldn't find the clause either and then he twigged! I had been given an initial copy of a contract from the LA office file draw which was out of date by 2 years! All their new contracts had this new clause inserted but mine hadn't!

He spluttered a bit and then do you know what he said? " Shall we just call it a £1000 then?"

"You call it what you like" I said "But I am not paying you a penny!" I gave him my Solicitor's telephone number.

I walked out of the office and never heard another thing about it.

Mel 1 ---- LA 0

[janeiro]

In conclusion, I have accepted the LA offer of 50% discount, which come to a renewal fee of 3%, since apparently they had already lowered their renewal fees from 8 to 6%. I did speak to a lawyer, and she was of the advise that the agent cannot charge renewal fees if they don't do the renewal, which kind of agrees with my view. We all agree that a "contract is contract", and once you sign one y should respect it. However when a clause is clearly unfair to one of the parties (usually the weaker one, i.e. the amateur landlord vs the LA) it is not uncommon that such clause can be made void.