Evicting tenants just to break a contract with a letting agent

by Mark Alexander

4 years ago

Evicting tenants just to break a contract with a letting agent

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Evicting tenants just to break a contract with a letting agent

I was talking to Tony Sheldon at LettingSupermarket.com this morning about the increasing number of landlords who are being forced into evicting perfect tenants as the only way to get out of a contract they have with their letting agents. Evicting tenants just to break a contract with a letting agent

Tony explained that he has conversations with landlords on a daily basis who are so frustrated with the service and the charges by their agents that they are seriously contemplating this action. In many cases, the alternative is to pay thousands of pounds in compensation to the existing letting agent for early termination, particularly in London.

It is a sad fact of life that so many people get taken in by the pretty ladies in branded mini’s or the swanky offices and posh coffee that these letting agencies use to schmooze unsuspecting landlords into giving them their properties to manage. Why don’t they read their contracts? Well I may never be able to answer that question but clearly they don’t?

Given that so many people are frightened by the prospects of litigation these contracts are rarely challenged, even when there are serious breaches of contract on the agents part.

What would you do if you were in this situation?

Would you ……

  1. continue to pay the exorbitant charges of a sub-standard agent?
  2. roll over and pay the early termination fees just to get away from them?
  3. mount a legal challenge to break your contract penalty free based on unfair contract terms and/or negligence or breach of contract on the agents part?
  4. learn from the experience, take the easy option, serve notice on your perfect tenant and start a fresh with another agent whose contract you would read with great care?

Whichever option you choose, if you are anything like me, it will give you sleepless nights.

Personally I’d go for the legal option wherever possible. That’s easy for me to say though as I have more experience than most (other than lawyers of course) in terms of dealing with litigation. It would be remiss of me not to point out that you could bypass solicitors and seek the initial opinion on a case from a barrister if you were to purchase a Litigation Warranty membership for just £300 a year though – click here for more details.

I suppose the reason Tony comes across this more than most is due to the prices that LettingSupermarket.com charge for the service they provide. For £34.99 +VAT per month per property (no up front fees unless you are in London or have a particularly large property) they can deal with absolutely everything for you, including viewings, floor plans, advertising, referencing, rent guarantee insurance, professional inventories, rent collection, etc. etc. etc.

I will leave you with these final questions. Should there be a cap on the maximum compensation that a landlord should be expected to pay for early termination of a contract with a letting agent? If so, how much do you think that cap should be and do you think the maximum compensation should reduced over a period of time, e.g. one twelfth per month?

To contact Tony for more details of the services provided by lettingSupermarket.com (without obligation) please complete the form below.

Contact LettingSupermarket.com

 



Comments

If everyone read their contracts before signing, and objected to what they didnt want, then lawyers' workloads would noticeably reduce!

The current crop of cases that we are looking at range from disputes with one-man bands to disputes with nationally known franchised chains.

We do recommend Litigation Warranty for anyone who may be contemplating legal action, or even worse, where legal action is taken against them. Claims do not need to relate to an actual case; sometimes it is good to know from a lawyer exactly where you stand.

Ian Ringrose

4 years ago

There should be a cap on termination of a contract with a letting agent.

An agent should never charge more for terminating a management contract then they would have charged for doing a “let only”.

On a personally level, we decided to put the rent up knowing that the tenant was likely to leave because the agent was wasting our time with poor admin and failing to control the unreasonable expectations of the tenant.

If the agent/tenant had given us an easy life we would have just let them be on their below market rent.

If an agents changes leads to a low return for the landlord, then it is reasonable for the landlord to put up the rent to a level that gives a better return, provided that the landlord can cope with the costs of a void. In our case it was all the “add on” charges, for inspections, new ASTs every 6 months, etc …

Mark Lynham

4 years ago

Im assuming this is a London thing as I have never come across it before in my 20 years of lettings.

Mark Alexander

4 years ago

Reply to the comment left by "Mark Lynham" at "16/07/2014 - 11:08":

Hi Mark

Yes it's predominantly London but as is always the case, the ripple effect is happening.
.

Ian Ringrose

4 years ago

Our problem was in Wolverhampton and as much to do with the level of service then the charges, if the tenant was great and paying a good rent, we would have paid the termination charge.

Most of the worse charges seem to be in the same area as urban foxes, once one foxes discovers they can break into bins to seal the others start to copy, it seems to be the same with a lot of letting agents.

Don Holmes

4 years ago

It is regretful that what is supposed to be a mutual property platform, supporting all aspects of our industry, that once again the poor old hard working legitimate,God fearing,hard up agent is getting another kicking!

In the first place, and I am qualified to make this statement, as I have been in the game for 25 years, As in any business it is your responsibility, nay duty, to read the contract and terms and if you at that point you consider them either unfair or unreasonable, you can choose to vote with your feet!
Now I am not looking to condone or excuse unreasonable fees or terms of contract, but would happily argue that if you agreed to them then you should accept and honorer them.
In my experience many Landlords have made lots of promises about fees and more instructions and so on, until after all our hard work identifying and in-putting a good rent paying tenant ,then they tell themselves, or others lead them to believe the "Yossa Hughes" theory " Giz a job I can do that" and take on a tenant like behavior and look to abscond their responsibility?

I would also just like to point out that we here on sunny Merseyside are not seeing, feeling, or experiencing "The ripple effect" So on the basis that property management is global, if anyone needs any honest reasonably charged managements advise or support see my membship profile on here. Regards Don

Mark Alexander

4 years ago

Hi Don

You have only part answered the questions though.

What advice would you offer to a landlord who had been stitched up by another agent but wanted to switch to you. By all means refer to one of the four suggestions I have offered, unless of course you would like to add another or admit that you would tell him to honour his commitments to the agent he is with now.

Also, you seem to agree with the other point I am making but arguing that I am giving honest, hardworking agents agents a kicking at the same time. Which is it please, it can't possibly be both or even a bit of both.
.

Mark Alexander

4 years ago

Reply to the comment left by "Ian Ringrose" at "16/07/2014 - 14:02":

I agree Ian, more still where there are tons of foxes. It would not surprise me if a London agent was to combine to two words and perhaps re-arrange them to create a business name - tons Fox - perhaps? LOL
.

DC

4 years ago

It's such a pity that we cannot name and shame on this site! I believe the problem is far more prevalent outside of London than we are letting on.

Regarding some points made above, many new landlords do not know any better than to go along with the rip-off fees that agents are charging because so many are doing it as Ian says.

I agree that legal action is the way to go when the service received from the agent falls well below an acceptable standard and from experience the threat of it worked for me. I'm sure that you are referring to that agent local to me Mark with your description! Probably not, but your description is uncanny and so true. Let's face it, to finance those expensive cars and so many staff that are on ridiculous commission for every property they let, somebody has to pay the wages and not only is it the landlord but also the poor old tenant.

It's no wonder that a certain political party is talking about abolishing tenants fees if they win the next general election but that will only put more financial stress on landlord fees.

I agree that landlords should carefully read the small print in a contract but they should also have a good look at all agents in their area and study all the fees they charge, not only to you as the landlord but also to the tenant because both will have a major impact on your business if you and the tenant are being taken for an expensive ride.

The bottom line is, speak to other landlords in your area and ask as many as you can for their advice on who to use and which agents to avoid. It could be the difference between making a good go of your rental business or as Mark puts it, many sleepless nights.

Mark Evans

4 years ago

I was in the position earlier this of wanting to do away with my letting agent due to poor performance and various other factors. After some fruitless discussion, the agent issued court proceedings for non payment of 'Management Fees' after I had instructed them that I no longer wanted them to manage the property. I did consider whether it was worth going down the vacant possession route for a day with my tenants to avoid the fees and the legal hassle but I decided to fight back.

I reviewed the Foxton's case and others and scrutinized my agency agreement. I spent many hours building my legal defence and counter claim, all without legal representation.

When I submitted my evidence the agent dropped their case!!

The agency agreement contained many unfair clauses and some of which were similar to those identified in the Foxton's case.
Their fees were not clear and they hid the important information in the T&C's
I spoke to the OFT, ARLA, TPO and Trading Standards. The agent's agreement was in contravention to the TPO's Code of Practise in some areas.

It's easy to say the Landlord should read the small print but I say the agent should construct their contracts fairly and follow the guidance from ARLA, TPO etc.


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