Estate agent commission for existing tenants

Estate agent commission for existing tenants

10:16 AM, 27th August 2013, About 10 years ago 7

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I’m in the process of purchasing my first buy to let. I’m buying it through an agent, who also manages it for the current owner. Estate agent commission for existing tenants

I’d like to keep the current tenants and they’d like to stay. However, I’d like to manage the tenants directly, without an estate agent being involved.

In spite of this, the estate agent is asking for a fee in return for finding the tenant for me. I’ve argued that I don’t require any work from them at all, and don’t have a contract with them, so there’s no reason I should pay them. But needless to say they’re quite keen on the idea that I owe them money.

Does anyone else have experience of this?

Is it common practice?



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Mark Alexander - Founder of Property118

10:25 AM, 27th August 2013, About 10 years ago

Hi David

It is highly unlikely that the estate agent has any right whatsoever to demand commission on this basis. His contract will be with the current owner who will no doubt be paying a fee for selling the property plus a fee to break the management contract, unless of course the vendor has made it a condition of sale that these fees are payable by the purchaser. You solicitor should be able to check the sale contracts and confirm this for you.

If there is no mention of this in the contracts of sale you can simply go ahead and complete the purchase without any liability to pay the agents fees. If the Estate Agent pursues those fees I would report him to his professional body - note that he must be a member of The Property Ombudsman or Ombudsman Services to trade legally. If he's a member of neither report him to Trading Standards.

My worry in this scenario would be the tenants deposit. Ask your solicitor to ensure the tenants deposit is retained from the agreed purchase price, then remember that you must protect it and serve a Deposit Protection Certificate and Prescribed Information to the tenants within 30 days of completion.

David Clark

10:31 AM, 27th August 2013, About 10 years ago

Mark - thanks for this. Hadn't thought about the deposit, but good point, I will do as you suggest.

Had anyone else come across this before?


Mark Alexander - Founder of Property118

10:45 AM, 27th August 2013, About 10 years ago

Reply to the comment left by "David Clark" at "27/08/2013 - 10:31":

I found a very similar discussion based on another Readers Question here >>>

Neil Patterson

10:46 AM, 27th August 2013, About 10 years ago

Hi David,

Excellent advice from Mark above especially remembering the deposit.

The Vendor has instructed the Estate Agent to sell his property and as an Estate Agent the duty of care is to the Vendor to sell for the best price as quickly as possible.

The charging of fees to you as a Letting agent is a clear conflict of interest.

Just ask them if they want to sell the property or not and put your offer in. If you think the Vendor did not get your offer contact TPO.

David Clark

11:29 AM, 27th August 2013, About 10 years ago

Thanks Neil. My offer has actually been accepted, and solicitors have been instructed.

I'm clear that I have no obligation to pay this fee. Needless to say this doesn't make the estate agent happy. Having a hostile estate agent and this point (before exchange of contracts) is not ideal, but not the end of the world either.

That's why I'm interested in how common these situations are. If it's likely that the estate agent has charged this fee to dozens of buyers and I'm the first person to resist, or if it's rare.

Neil Patterson

12:47 PM, 27th August 2013, About 10 years ago

Reply to the comment left by "David Clark" at "27/08/2013 - 11:29":

Hi David,

Although the estate agent could recommend another buyer I think that would be risky for them to give up a sale!

Other than that the Estate agent now really has no more involvement as Sale made job done hand over to Sols.

I personally have not heard of this before and would think/hope it is rare, because to be professional they must first act for the Vendor which is the right thing to do.

Nick Pope

11:31 AM, 31st August 2013, About 10 years ago

I have not come across this exact situation before but I am very clear that there appears to be

a conflict of interest as if they are acting on behalf of the vendor they are putting his sale

at risk with their tactics. You should have a sales letter from the agents which will give the

name of the vendor and there is no reason why you should not contact him direct to inform

him of the situation and perhaps (if you fancy a bit of brinkmanship) intimate that your offer

may need to be reduced a little to take account of the risk that the agent might instigate a

claim after the sale has completed. I suspect that the seller will have stiff words with them

at that point.

I also agree with the earlier comment that there is no contractual relationship between you

and the agent and any claim would not be successful.

This neatly leads to another matter. If you read agreements with letting agents they

invariable contain a clause that you agree to pay them a fee if the tenant decides to buy

the property at some point in the future. I see the logic but the fee required is often at a

level way above the normal fees chargeable if they were in competition with other agents

for the instruction, normally 2%. I always cross this out and put in 1% and have yet to have

an agent refuse a letting instruction.

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