Are letting agents playing fair with their fees?

Are letting agents playing fair with their fees?

15:03 PM, 26th October 2022, About 2 years ago 25

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Hello. Our lettings agents found us tenants who stayed a year and then asked to renew for another year. Their contract was renewed for a further year and our agent charged us 8% of ‘incoming rent ‘ for the following year, billing us for the first 6 months of the one year tenancy.

After only a month our tenants had to leave the country for family reasons so gave notice and stayed a further two months.

Two things of concern: a) there was ‘incoming rent ‘ for only three of those six months for which we had paid the agent a percentage upfront, and b) the agents’ terms and conditions state that the percentage of rent they charge for the second year of a tenancy is 7, not 8.

The agents claim that the charge was payable whether or not there was incoming rent (although their invoice states “8% of incoming rent”) and was a fee for renewing the lease.

Are the agents entitled to a percentage of rent never received?

Is it reasonable to expect them to refund the difference between the 8% they charged us and the 7% we should have been charged?

These issues have only come to light now as we prepared our paperwork for submission to our accountant.

Any advice or suggestions much appreciated.


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Judith Wordsworth

10:25 AM, 27th October 2022, About 2 years ago

If their contract terms state 7% then 7% is what you should be paying.

Pay that and say should they insist on 8% they are in breach of contract and you are happy to terminate.

Laura Delow

10:26 AM, 27th October 2022, About 2 years ago

The old caveat of buyer beware - you need to look closely at the T&C's you signed up to, but as a layperson it appears to me from what you say that they should refund half what they charged upfront unless another clause within their T&C's states otherwise, and if it states 7% it should be 7% not 8% unless there's a clause within their T&C's stating this can increase. Moving forward...find a new letting agent.

Jay Patel

10:27 AM, 27th October 2022, About 2 years ago

Simply put, please have a look at your terms of engagement when you first signed up to their services. If you don’t have a letter detailing all of the fees at the very beginning, then the fees do not stand. The renewal fees should’ve been listed on their agreement. If they are not in there, not entitled to charge. This will be a commercial agreement between yourself and so you’re bound by what you sign unless the fees are considered to be prohibited, costs, which are deemed to be illegal.

In addition to this, all of their fees should be registered and listed on their website by law. You should have a look at the fees listed there to compare what you are being charged. ... there have been quite a few changes in the law over the last couple of years in regards to allowable fees.

I will go back and try and renegotiate with the agent and tell them that if they don’t adjust the start of the new will be using another agent

Graham Bowcock

10:29 AM, 27th October 2022, About 2 years ago

Hi Nancy

The answer will be in the terms of business that you signed up to. You will be obliged to pay what you agreed.

If the fee should have been 7% and they charged you 8%, then that is plain wrong and they should refund you.

There is no legal reason why a new agreement was required (and in the end it proved pointless); you could have let the tenants stay on a periodic tenancy.

Jay Patel

10:34 AM, 27th October 2022, About 2 years ago

We also have to take into consideration, the fact that the government outlawed the charging of administration and tenancy fees which were usually charged to the incoming tenant. When these were abolished, agents reallocated those fees and made landlords pay for contract on the live ministration charges.

Even bank charges fees for a single penny that goes into your overdraft limit.

A doctor charges £75 to write a letter so Linus can’t people than lettings industry charge for the work that they do. ... it does seem a little bit unfair that letting agents have passed on these costs to the landlord. I suppose that’s why they justify charging renewal fees

David Smith

10:38 AM, 27th October 2022, About 2 years ago

Hi When you instruct an agent to find you a tenant always negotiate with them that there will be no renewal fees. ( I never pay a renewal fee)
If the agent did not from the outset highlight to you that there is a renewal fee in their T&Cs then you do not have to pay any further fee’s unless they are managing or collecting the rent.
According to the High Court the ruling against Foxtons agent’s must make it known other than in their standard T&Cs that an important clause such as a renewal fee is payable it just cannot be hidden in their T&Cs.

In future you can continue with the existing contract on a Periodic Tenancy or just sign a new contract without the agents getting involved.

Alison Walker

11:22 AM, 27th October 2022, About 2 years ago

I negotiated with my agent that at the end of the initial 6 month period the tenancy agreement becomes periodic. They still charge me a 'renewal' fee at this point but that's it until I need to find a new tenant. I accept the renewal fee for allowing the agreement to go periodic as the agent will have done some administration at this point so I feel their fee is acceptable. Going forward though once S.21 is confirmed as being abolished I will put the property up for sale once tenant in situ gives notice to vacate!

Ian Cognito

12:09 PM, 27th October 2022, About 2 years ago

Reply to the comment left by David Smith at 27/10/2022 - 10:38Your final paragraph, David, will not apply if there is an ongoing letting fee payable for the duration of the tenancy.
If this is the case, it becomes irrelevant whether the agent sets-up the renewal, Nancy does it herself, or the tenancy lapses into periodic.

Bristol Landlord

15:45 PM, 27th October 2022, About 2 years ago

Nancy, I feel the two issues of charging commission of 7% instead of 8% and of taking commission on 6 months rent when only 3 months received are very significant. They show more importantly than just the money that your agent is commission hungry and will take every opportunity to extract the most fees from you as possible.
Sharp practice seems to be their forte.
What else have they overcharged you for is what you should be asking yourself?
My advice is to ditch this agent as fast as you can and find someone more open and honest.
I guarantee in the long term you will regret staying with this agent if you don’t dump them right now.

Dennis Forrest

16:39 PM, 27th October 2022, About 2 years ago

My tenants have just renewed. I intended to keep the increase small, around 2%, and just increase their rent from £1375 to £1400 p.c.m. (in line with the government's old inflation target!).
However my letting agents wanted £150 inc. vat for a new 12 month tenancy agreement which would take half of this increase. So I gave my tenants a choice £1400 pcm on a periodic tenancy basis or £1414 pcm for a new 12 month tenancy agreement. The extra £14 per month, £168 for the year will equate to the £150 after deducting 8% + vat. No surprise that my tenants went for the cheaper periodic tenancy.

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