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

Tracy Savage

19:30 PM, 24th August 2012, About 10 years ago

Thank you to everyone who has responded it has all been really helpful. I am going to take the matter to the property ombudsman and have told the LA I will not make any payments as the contract terms are unfair. I have already quoted the Foxtons case to them but it has not helped yet.Hopefully the ombudsman will do the trick. I will let you all know what the outcome is in due course. Thanks again, especially to Mark!

Mark Alexander - Founder of Property118 View Profile

20:35 PM, 24th August 2012, About 10 years ago

Hi Tracy, good to chat on the telephone this morning and i'm delighted that you were able to follow my email instructions on commenting. I think I'll send those to all 173,000 subscribers this weekend. I'll probably regret in next week if they all start commenting though as I have undertaken to read every one!

As you agent is registered with TPOS I think that's a very good move. If the agent does commence legal proceedings I doubt any Court will want to hear their claim until the Ombudsman has responded to your complaint. I suspect you may even have a good argument for a counter claim for costs and previous renewal fees paid from what you have said.

22:40 PM, 24th August 2012, About 10 years ago

Tracy, we would strongly recommend visiting the OFT guidance page http://www.oft.gov.uk/OFTwork/consumer-enforcement/consumer-enforcement-completed/foxtons/qandas#named17 Whilst it does concern the Foxtons case, the result affects all contracts issued by letting agents, and very rarely are two contracts the same. If the agent is registered with us, this may also be a matter the Ombudsman
could consider if you are unable to settle the dispute directly with the agent. You can visit our website for more information http://www.tpos.co.uk should the agent not settle the dispute.

19:45 PM, 25th August 2012, About 10 years ago

Nationals won't entertain it (!) officially ......but as staff are so underpaid, bottles of wine, chocolates and little cash gifts are a fantastic way of getting tenant referrals out of these !!! some of the smaller independants either refuse point blank or get on their high horse .....some of the other smaller medium size guys will take it on board - i work with a core 11 agencies (some 1 man operations - which tend to b the best - surprisingly!) others come and go. overall i don't really suffer from voids and because i control the whole process, i weed the rubbish out fairly easily. They have learnt over time not to bother wasting their time bringing me undesirables. I have been at thi nearly 20 years and have refined my criteria and systems to make life as easy as possible. Even those who dont like my terms get emailed with my "to fill" list each month - if some one walks into their office looking for a prop on x street and they only have mine to offer they would be silly not to take the fee wouldn't they - we do get the occasional let - even from the stubborn ones !!!!

15:45 PM, 26th August 2012, About 10 years ago

Like your style!!!, long may you prosper.
Have you ever thought of doing a suggested model of a LA conditions which includes all your terms and good ones from a LA perspective which you would consider fair.
I reckon you have been in business a lot longer than most LA.
To have a suggested set of conditions which suits both the LL and the LA would encourage a LL to possibly use that LA in preference to the other LA around!?

23:06 PM, 26th August 2012, About 10 years ago

Hi Mark,Tracey et al. Sorry for this lengthy reply but here goes;

This is a copy of the notes I used in a talk I chaired at the recent Eastern landlord Association meeting this month in Norwich. ( I am the unpaid Norwich branch chairman and an unpaid director).

Some suggested Tips for choosing a suitable Letting
Agent.
Are they qualified?
ARLA, NAEA, RISC, Safe Agent

Every Letting agent that is a member of
the NAEA (National Association of Estate Agents) or ARLA (Association of
Residential Letting agents) HAS to be also a member of the Housing Property
Ombudsman the complaints resolution service for Sales and Letting agents in the
UK.

For Landlords this is great news as it
means that if you have complained to your agent and your issues are just not
being resolved you can take the matter to the Ombudsman and they will
adjudicate for you.

Is their client account bonded and protected
in a client money protection scheme (CMP). All ARLA agents should have
CMP. Remember check they are ARLA listed on ARLA s website.

If you already have
properties with a letting agent ask to see your files. They should contain your
Tenancy deposit certificate, gas safety certificate, tenant and guarantor
credit checks (if required), references, guarantors details, Inventory
preferably with photos or HD video, copy of the Tenancy agreement and Standing
order setup. If the files are well structured complete and up to date that’s a good
indicator.

Remember as a landlord you
are still responsible if you have no up to date gas certificate and something goes
wrong, If the agent took the deposit monies and did not protect it then again
you are responsible for up to three times the amount of the deposit if the
tenants take it to arbitration.

Ask where the letting agents advertise. As a
bare minimum your property should be professionally advertised on at least
Right Move, Zoopla, the letting agents own website and maybe the local
press. If you have voids as the landlord it comes straight out of your
pocket.

Is the letting agent a landlord? If they are
they can understand your point of view.

Is the letting agent experienced? Do they know
more than you about property letting? If not do you really want them
looking after what in most peoples case is their most valuable financial
asset.

What are their arrears rates? 2% or less is
good. Also how many times have they been to court over for example the
last year?

What is their dedicated letting staff to
property ratio. 1 lettings department member of staff per 75 properties is
a good average industry level.

If you have a property with a letting agent.
Phone up and ask if they have any properties that fit the criteria of your
property. Even better get a friend to go into the office and enquire about
properties like yours in the area you have your property. If yours is not
recommended ask yourself are they the best agents for you?

Norwich has had more than its fair share letting agents "situations" shall we say so hopefully the above information will help you find one of the very good ones. Personally I only choose
to work with people with a reputation for honesty, integrity and a professional
approach. If I do not develop a quick bond and respect for them I follow my gut
instinct.

There are lots of good
people out there so try not waste your time energy and money on the bad
ones.

Remember low cost does not
necessarily mean good value. Some 40 % of your profits could be lost on voids,
maintenance and unnecessary expenses.

A final tale.
We at the ELA sent out a simple questionnaire to 20 of the Norwich and surrounding area letting agents and gave them the opportunity to speak at the ELA Norwich branch meeting to address the landlords some of whom are in dispute in the courts against a certain letting agent. Of the 20 letting agents sent the questionnaire 18 of them didn't even bother to reply. (1 actually phoned the ELA office to inform them he had thrown the questionnaire straight in the bin?).Your property portfolio is probably one of your greatest assets why gamble with it?

The way people do anything is usually the way people do everything.

Author Phil Walters. ELA
Norwich branch chairman and ELA director.

Thanks to Sally and
Stef for their input.

PS
I wish this article had been published prior to me submitting it to the ELA magazine as I would have definitely included

"The OFT has an excellent guidance page on unfair terms in
consumer contracts

which includes renewal fees and can be found here http://www.oft.gov.uk/OFTwork/...

If the agent is registered with us, this may also
be a matter the Ombudsman

could consider if you are unable to settle the
dispute directly with the agent"

Keep up your excellent work. Its much appreciated.!

Mark Alexander - Founder of Property118 View Profile

8:57 AM, 17th December 2012, About 10 years ago

Hi Tracey

Please update us on the position. I have received a very similar request from another landlord today and your case may prove to be a very useful reference point.

I also recall you sending me an email with details of another piece of case law relating to this scenario but for the life of me I can't find it. If you wouldn't mind quoting that case here it could prove to be incredibly useful to several landlords.

Thanks in advance

Regards

Mark

Mark Alexander - Founder of Property118 View Profile

9:02 AM, 17th December 2012, About 10 years ago

Update - one of my colleagues has kindly pointed out that our News team reported another case back in 2010 which may well be more relevant. Please see >>> http://www.property118.com/index.php/landlord-wins-unfair-fees-case-against-letting-agent/502/

Mark Alexander - Founder of Property118 View Profile

16:33 PM, 17th December 2012, About 10 years ago

This old chestnut has reared its ugly head again. Today I received an email from a landlord requesting urgent legal assistance. This time the landlord is being charged a whopping renewal fee of £2,782 per annum by Hamptons which represents 6% of rent plus VAT – must be a VERY nice property. The arrangement was for tenant find only, Hamptons don’t even manage the property.

Is anybody aware of any case law regarding this scenario since Chestertons Global Ltd v The Waterfront Partnership & Nicholas H Finney, heard in March 2010 before District Judge Wakem? Note that the Foxtons case came before this one.

16:57 PM, 17th December 2012, About 10 years ago

The problem always comes if there is no small print and the landlord has signed the terms. There's not a whole lot he would necessarily be able to do in that situation. I used to work for a Letting Agent who charged very high renewal fees, but they were actually set out in the largest print on the contract, so it was not as if we were hiding them a la Foxtons. We had only one issue with the fees when a landlady tried to use the Foxton case to get out of paying, and the other reason the company did not get debt collectors involved was because it was such a small amount. The company simply ended our relationship with the woman and moved on.

Much like if a vendor tried to get out of paying a fee for the sale of their property, if this landlord has signed terms that made renewal charges obvious and upfront (and knowing Countrywide their contracts will be watertight, and clearly written), then the landlord won't be able to do much other than pay. His best bet would be to try and break off the relationship with the agency, and hope that the manager at that branch is understanding and will let it go without getting debt collectors involved.

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