Letting Agent Termination Clause

[PappaSmurf]

I recently wanted to terminate my contract with my letting agent (fully managed service) and to my horror discovered that in 2010 they had changed their termination fees from 50% of one month's rent (only slightly more than 3 month's commission) to would you believe 3 month's rent, an astronomical £1,650.00 + VAT.

So, I am trying to find out what the industry norm is. Would you please check your agreements and let me know what charge your letting agent would levy as I am fairly sure I would be able the challenge that clause as unfair on the grounds of it being onerous and prejudicial, i.e. it effectively prevents termination of the contract for financial reasons.

Your comments would be appreciated

[Carryon Regardless]

It's alright them deciding to increase their fees but did you enter into a new contract on those terms ?

[Melboy]

You would only be liable to the new terms of contract if you had signed up for that new contract.

If a contract should change then you should have been informed of important changes affecting your current terms.

LAW will have something to say on the matter and probably give you the legal understanding.

[Mortitia]

If you have a signed contract saying termination is 3 months rent or whatever that is all they can charge. Any new charges you have not signed up for cannot be enforced upon you.

Mortitia

[PappaSmurf]

Thank you all for your replies so far. The main thing I am trying to find out is what fee Letting Agents typically charge for terminating the contract. If the industry norm is much less it gives me evidence to prove the clause unfair.

Thanks again

[LLAW96]

This has been answered time and again. Agents will seek to charge various amounts when a party seeks to end the agreement. Such disputes will if not compromised end up as a small claim in the county court. If the clause is punative in nature then it will be struck out under the unfair terms in consumer contract regulations 1999 and the judge will usually seek to apply a remedy based on a breach of contract plain and simple. Putting aside whether you actually signed up for the increased fee the amount being charged seems punative, check whether your agent is a member of a professional body or ombudsman scheme.

[PappaSmurf]

Thanks Law

The Agents and myself have kissed and made up. Although I was pretty confident at winning a Small Claims case I have better things to do than get involved in a protracted, time consuming and possibly costly legal battle.

I thought my best course of action would be to return to the status quo and then persue the matter with the OFT as they seem quite interested in this sort of thing following the Foxtons Ruling. My Agents are members of the RLA and The Property Ombudsman Lettings, they also display the OFT Approved Codes logo.

[Grampa]

What is the exact wording of the clause? You sometimes find they are so badly worded they dont make sense and therefore tricky to enforce.

[PappaSmurf]

What is the exact wording of the clause? You sometimes find they are so badly worded they dont make sense and therefore tricky to enforce.

Why is everyone picking up on the wrong tack. What I want to know is what is the wording of the clauses YOU HAVE with your Agents, I'm trying to find out the Industry Norm.

[PappaSmurf]

For everyone's benefit this is the wording of the clause, which will probably identify me to my letting agents if they read this forum too.

"Termination of Agreement

Either party my withdraw from this Agreement by giving one month's notice. In the event of this Agreement being terminated whilst the Tenancy continues, a fee equivalent to 3 month's rent shall become payable to the Agent."

Now read it carefully. According to the wording even if the Agent withdraws from the agreement the Landlord still has to pay the Agent 3 month's rent. So there you have it: a badly worded clause.

[Richlist]

Your question may seem like a simple one to you but that is not necessarily the case.....there are a number of parts to it:-.

1. Assuming your agent found/ introduced your tenant then they are entitled to be paid whilst that tenant remains in occupation. If you want to terminate the tenancy agreement and find your own tenant then they should not be entitled to any ongoing charges provided they are not involved.

2. The agent cancellation charges seems exceptionally high, although I have no experience in this matter. My understanding is that many agents expect to continue to receive payment from a landlord for however long 'their' tenant remains in occpation. It seems that your agents are, by virtue of the contract clause, making a one off charge in place of any ongoing payments. The contract wording does seems unfair but I suggest you seek formal legal advice and consider the alternatives if you intend to terminate the agent but keep the tenant..

3. You are unlikely to receive a satisfactory respose in establishing an industry norm figure for termination. I suspect many agents don't build one into the contract as it doesn't happen very often and they make a value judgement when it does.