Renewal fees from letting agents – READERS QUESTION

Renewal fees from letting agents – READERS QUESTION

10:11 AM, 22nd August 2012, About 10 years ago 36

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Readers QuestionsI have a question regarding renewal fees from letting agents and would very much welcome any feedback or advice that readers of Property118 can offer.

I have used the same letting agent for the past 7 years. I do not have a portfolio so felt it would be best to use an agency. The agreement I entered into back in 2004, provided for all renewals to be  charged at 8%. For the first 3/4 years 2 new tenants were introduced and there was one renewal which I renegotiated at a reduced rate of 6%. For the past 3 years the same tenants have stayed. I have negotiated the rent increase, organised the relevant certificates and done the tenancy agreement. The agents have done nothing and did not raise an invoice for the 2011 renewal so I assumed they had accepted they should not be paid as they have done no work on either renewal.

However, they have now sent me an invoice for 2 years worth of fees which I have been arguing with them. I have done some research online and it seems there may have been a change in the law on enforceability of renewal fees in recent years. having checked with a couple of agencies locally they tell me they only charge £120/£150 for renewals whereas my agent wants to charge the full fee.

They have offered a 25% reduction but that still leaves me with a bill of over £1500.00, if I do not pay they will take me to court in the next 14 days. I will also be in exactly the same position next year if the current tenants renew again.

I have found a couple of cases that deal with the point almost in favour of the landlord, that the courts have looked at, but I wonder if there is anything else I can present to them. They have refused to tell me what the renewal fees are for their 2011/2012 landlords.

Question is should I chance defending the potential court action in he hope that the Judge will agree the 2004 contract terms are unfair?

If you have any suggestions I would appreciate your input, also this may help some of your readers who could be in a similar position as me.

Thanks and regards

Tracy



Comments

23:14 PM, 22nd August 2012, About 10 years ago

It is perfectly normal to issue fresh 6m /12mth AST s to give both LL & T peace of mind for fixed periods. I would not be comfortable with the fact that all of my T could dump me in it with 1mth notice if they were all on periodic T. Larger portfolios need stability and surety of rental income, Planned maintenance etc.

6:38 AM, 23rd August 2012, About 10 years ago

Interesting; any chance of having a copy of what terms you have when you present them to the LA.
I reckon they would be very useful for all LL in their dealings with LA.

6:43 AM, 23rd August 2012, About 10 years ago

There is a common delusion that a 6 or 12 month tenancy guarantees to the LL that the tenant will be there at least for 6 or 12 months.
The AST does no such thing.
A tenant can pay their 1st months rent and a deposit and leave 3 months later and there will be nothing you can do about it.
Yes you will have the deposit and advance rent.
Are you going to try and track down the tenant and apply a CCJ for breach of conract.
Of course you won't, it isn't worth it.
All an AST does is prevent the LL from evicting the LL until a Section 8 or Section 21 process has been carried out.
Of course the tenant will receive a duff reference and also on LRS if used.
Most LL don't use LRS and they will be exposed to this type of tenant.
They will just say they have been out of the country.
A LL CANNOT presume that a tenant will comply with the term of an AST.

Mark Alexander - Founder of Property118 View Profile

8:32 AM, 23rd August 2012, About 10 years ago

I mentioned it and pointed to articles we published on Property118.com at the time. The Property Ombudsman Service also provided a link to a page on their website which answer frequently asked questions about the case. It's long, very detailed and WELL WORTH reading if you haven't already.

Antony Richards

9:05 AM, 23rd August 2012, About 10 years ago

As Joe says the Foxtons case gives guidance on renewal fees - quite a landmark case protecting the landlord against rip-off agents.
There is a great deal of anti agent rhetoric on this thread. I would suggest almost of of this is against larger corporate or quasi-corporate agencies. Use a professional small local firm where you can talk to the boss if there is a problem. We charge 12-5% (plus VAT) not the 8 -10% fees mentioned, and we are still not the dearest. Be prepared to pay for good advice and service but if there is a problem you can go to the top without a wonderful 'complaints handling procedure'

Antony Richards

9:11 AM, 23rd August 2012, About 10 years ago

And another thing, corporates insist on renewing tenancies every six months and then charge the tenants for the provilege, having already charged them a small fortune at the beginning of the tenancy. Absolute rip off

12:32 PM, 23rd August 2012, About 10 years ago

Agreed ther are no Gaurantees - so why bother even using an AST with that logic ? The vast majority of T are fine & decent people who will honour the terms of an agreement. Personally i work with T whose cicumstances change - not against them. ie i keep lines of comm open at all times - if someone needs to leave early then i fill it asap and charge t upto that point. In 15 yrs of letting with >100 tenants i have only ever issued 1 S21 and that didn't get as far as court, largely due to the fact that i don't allow agents to give me surprise T's - i do the referencing (via tenantref.co.uk). I run a fairly tight ship with clear systems in place to deal with problems. I also don't pay agent to do anything other than what i request - "find me a potential T" ...i certainly do not pay them twice to do this....for doing sweet FA!

17:04 PM, 23rd August 2012, About 10 years ago

Letting agent & XXXXXX.

We are happy to work with agents on a Tenant find only basis to help us
fill our portfolio

What we expect:

1. Letting agent to market the property, possibly with a to let sign at
property but confirm with us before erecting a sign.

2.To book in viewings with XXXX/Tenant at property before conducting
viewings.

3. Once a prospective tenant has been identified please charge the T tenant
your fee to them and take an admin fee/holding deposit from them (min £200)
& contact details: name address. Tel & email to pass on to us. Please
note that we will not begin referencing until we are in receipt of the admin
fee/deposit.

(We are are happy to pick up the case and sort out deposits if
necessary)

At this point we will pick up the case and perform:

1. Tenant referencing - Id verification - Credit checks - employment and
salary checks - prev LL referencing, organise lease, protect bond, video inventory and move
tenant in.

2. We will pay introducing agent : One week's (25%mth) rent minus £65 for
the first tenant and £25 for every subsequent T who wishes to reside at the
property whom we need to reference .

This fee will be become payable by OPM to agent when T has cleared
referencing & signed lease should the application fail at any stage of set
up no fee will be payable to introducing/finding agent as no Tenant
"found".

Also once referencing has been initiated the "£65 for the first tenant and
£25 for every subsequent T" is non refundable to either introducing/finding
agent or to prospective tenant. Please note: we will not consider an application
until the £200 admin fee/holding deposit has been lodged with OPM along with
applicant details as detailed above.
We pay a flat rate of £50 for Tenants who are found for rooms in house shares provided a min 6mth contract is taken and the T clears referencing and moves in as above.

This should avoid any confusion re:fees.

4:42 AM, 24th August 2012, About 10 years ago

Have you found LA look rather blankly at these and don't quite know how to respond!?
I reckon your cogent terms confuse the hell out of them.
I bet they say we will look at these and come back to you.
Funny then that when they wish to sign you up, you are not really given any time to read or question any of their terms.
Funny that!

6:57 AM, 24th August 2012, About 10 years ago

Yep I'm with you, we only have an AST because that is the law.
And yes I do as you do.
Somebody wants to leave early I work with them to ensure they have a good rating if the flat rents out.
This normally works out.
Do you never bother with RGI as I have it done for £10 which then qualifies the tenant for a RGI policy.
I don't really see the point of referencing if it does not qualify the tenant for a RGI policy.
Do tenantref do RGI?

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