Legality of Renewal fees for Periodic Tenancies?

by Readers Question

9:43 AM, 11th January 2018
About 3 years ago

Legality of Renewal fees for Periodic Tenancies?

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Legality of Renewal fees for Periodic Tenancies?

Dear P118 readers, I wonder if anyone has had experience with this issue lately?

I am using Foxtons to let a property (as they had an offer on at the time) and the fixed term (18m) is coming to an end in 60 days. I was called by Foxtons asking if I wanted to renew or get the tenant out.

I informed them I may be reverting to a periodic tenancy as I wanted the flexibility of vacating the premises. Foxtons informed me that despite them not doing any work after the initial contract, I would still be liable for a 9%+Vat Renewal fee even for periodic tenancies.

Now, I have read the OFT ruling back in 2010 which laid out:

On the 19th July 2010 the Office of Fair trading released a press release on its evaluation of its consumer enforcement case against Foxtons for breaching the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). In February 2010, the OFT secured an enforcement order from the High Court when it ruled that Foxtons’ renewal commission terms were not transparent, this led to Foxtons amending some of the terms. The evaluation has now found that the OFT intervention has resulted in positive benefits for consumer landlords that use Foxtons with an estimated annual benefit of at least £4.4 million.

The enforcement order relating to Foxtons declared that the terms listed below are unfair, not binding, and may not be used or relied upon in contracts with consumer landlords:

a. Terms which require landlords to pay renewal commission to Foxtons after the sale of their property to a third party because the original tenant remains in occupation.

b. Terms which require landlords to pay a sales commission to Foxtons in the event they sell the property to their tenant.

c. Terms relating to renewal commission, where the tenant remains in occupation, and in some cases an occupant introduced by the tenant, after the initial fixed term where the agent is not asked to provide any additional service.

My issue related to part C of this order. I wonder whether this is relevant nowadays as foxtons have amended their terms to be more clear that they want to charge these fees (as before they were buried in small print). They are still charging the same fees, they are just in larger print now.

I have never paid an agent renewal fees for a periodic tenancy so I wanted to know if this is still working practice among landlords, despite signing an agreement where their terms stated I would pay them a commission even in a “hold over” tenancy.

It is a confusing topic as on the one hand, the OFT ruling states they cannot charge fees on renewals where they do no work and on the other hand, their terms and conditions to this day still quote the fees.

Any advice would be appreciated.

Ved


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Comments

Jireh Homes

12:09 PM, 17th January 2018
About 3 years ago

Where the lease rolls over a periodic basis there is no action or document change required, other than a call to confirm this intent. So no justification for a charge.

Ramus Wood

20:41 PM, 17th January 2018
About 3 years ago

The original issue was that it was hidden so people didnt know what they signed up for. They fixed it now (apparently), so now it's purely a contractual matter.

silversurfer2017

21:03 PM, 17th January 2018
About 3 years ago

Forget all about contractual matters and concentrate instead on the Consumer Rights Act 2015 : In this situation the consumer is the landlord/property owner. The retailer is the letting agent.

Terms may be deemed unfair if:

'they are contrary to the requirements of good faith - meaning they must be designed, negotiated and entered into with the consumer in a fair and open way
they cause a significant imbalance between the rights of the retailer and consumer to the detriment of the consumer'

An agreement between a landlord and agent is just that - an agreement - not necessarily a legally enforceable contract. It can be challenged if its terms are not fair and reasonable.

Nick Pope

14:39 PM, 20th January 2018
About 3 years ago

I have a simple rule with agents and I simply go for a let and collect rent for 1 year (or initial term if shorter) after which I have the option to take over fully at no extra charge to me. It's take it or leave it and the agents all take it.
At the end of tenancy I can choose to leave it with the agent if the tenant is difficult or take over if they are easy.
My only caveat is that if the market gets difficult then agents may be in a stronger negotiating position.

Anne-Marie

17:24 PM, 2nd April 2019
About 2 years ago

Hi, on this I have a question. I rented out a property through Foxtons on a 2 year contract and paid a hefty 11% fee on £1600 pm rent. The 2 years is coming to an end. My tenants would like to renew but are happy for Foxtons to have nothing to do with it (they sent them a really aggressive letter about the contract coming to an end). I have just checked the contract. It states the following:
You will not be liable for Renewal Commissions relating to any period beyond the end of the second year from the expiry of the Initial Agreement.
Can I assume I won't be charged a renewal fee?

Ian Narbeth

17:29 PM, 2nd April 2019
About 2 years ago

Reply to the comment left by Anne-Marie at 02/04/2019 - 17:24
Anne-Marie
This is a duplicate of https://www.property118.com/possible-avoid-letting-agent-renewal-fee-case-self-management/#comment-112027
Please respect people's time and don't post the same question twice.

Anne-Marie

17:40 PM, 2nd April 2019
About 2 years ago

Reply to the comment left by Ian Narbeth at 02/04/2019 - 17:29
my apologies - I saw this post after posting on the other page and thought it was more appropriate here. I will delete from the other post.

Anne-Marie

17:49 PM, 2nd April 2019
About 2 years ago

Reply to the comment left by Anne-Marie at 02/04/2019 - 17:40
Cant delete the post. Sorry. I have responded to your comments on that post.

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