Renewal fees – same tenants?

by Readers Question

9:37 AM, 15th October 2018
About a month ago

Renewal fees – same tenants?

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Renewal fees – same tenants?

We have had our tenant in our property for 2 years on an initial 24 month tenancy, for which, we of course paid agents fees of 6%. Now we have come up to renewal time and naively I did not realise we are liable for fee’s for another 2 years still. 4% for 12 months and then 2% the following year should the tenants stay in! They also want to charge £150 fee to draw up the new tenancy although I have now convinced them to drop that charge.

It’s my fault for not properly understanding their fee’s, but effectively should our tenants stay on board for another 2 years which they have said they want to, the cost in fee’s would be around £1600. However, if I were to evict my lovely tenants and re-let through LettingSupermarket who offer effectively a finders fee about around £300 which includes advertising, viewings and reference/credit checks, and no ongoing renewal fees I would effectively save myself over £1000 once taking into account a few of the switch over expenses like cleaning, inventory etc.

Now I really don’t want to evict my tenants but purely on a numbers game, it makes the most sense right?

Alternatively I could increase my tenants rent by £50 which is what the agent is suggesting, and that would soften the blow a little, but either way my tenants are getting screwed and we look like the bad guys!

Is there anyway, that people know of, of keeping my tenants without paying these massive fee’s. I know in future I won’t be going with an agent who has ongoing renewal fees 🙁 There is a clause saying even if the tenant switches onto a periodic tenancy, we are still liable for the fees.

Many thanks

Danielle



Comments

Paul Shears

10:56 AM, 15th October 2018
About a month ago

I had a similar problem.
Get rid of the agents and preferably manage it yourself.
Tel the agent to refund the deposit first.
The agent will be obstructive but stick to your guns.
The tenants could become a problem - that's a "maybe".
The agent is a problem - that's a fact.

B4lamb

11:08 AM, 15th October 2018
About a month ago

Why not switch to a rolling 1 month contract then there are no repeat fees each 12 or 24 months?

David Price

11:32 AM, 15th October 2018
About a month ago

Reply to the comment left by B4lamb at 15/10/2018 - 11:08I agree, there is no need to renew the tenancy agreement. Instruct your letting agent not to renew but to let the tenancy continue as a monthly tenancy. This may be a contractual monthly tenancy if the original AST was set up correctly of a Statutory monthly tenancy if it was not, either way you should avoid the agent's fees for he will have great difficulty in justifying a fee for doing nothing.
Please remember that the Agent works for you and has to do as you say. The Agent is your slave not your master.

Ian Narbeth

11:41 AM, 15th October 2018
About a month ago

Hi Danielle
I am afraid, as you acknowledge, you did not read the contract at the outset and did not negotiate out the renewal fees. It's money for old rope for the agents but most agents will reduce or waive the renewal fee at the start of a relationship if the alternative is they get no fee at all and lose the business.
4% is annoying but it is 2 weeks rent. You could lose that if you had a void. You would also lose good quality tenants. I would be minded to try to negotiate with the agents but live with the cost if you have to.

lahatfield@gmail.com

13:26 PM, 15th October 2018
About a month ago

Reply to the comment left by B4lamb at 15/10/2018 - 11:08
This is why 🙁

"There is a clause saying even if the tenant switches onto a periodic tenancy, we are still liable for the fees."

B4lamb

17:46 PM, 15th October 2018
About a month ago

Reply to the comment left by at 15/10/2018 - 13:26
"There is a clause saying even if the tenant switches onto a periodic tenancy, we are still liable for the fees."
If that is the case then your agents are sharks. As Paul above says, you should be looking for a new agent as your current agent is fleecing you. You shold be naming and shaming them as well so we all know who they are.

B4lamb

17:47 PM, 15th October 2018
About a month ago

"There is a clause ...."
If that is the case then your agents are sharks. As Paul above says, you should be looking for a new agent as your current agent is fleecing you. You shold be naming and shaming them as well so we all know who they are.

Peter Hindley

17:58 PM, 15th October 2018
About a month ago

I was going to suggest let it roll into a Periodic but that avenue gets blocked off. My LA has in the past suggested a £15pm rent increase for a new 6 month tenancy. But they would charge me £125. Excluding tax implications, it would cost me £125 to gain £90 (with no voids) over 6 months. I'm guessing this Arithmetic thing is new to them.

Ian Narbeth

19:08 PM, 15th October 2018
About a month ago

Reply to the comment left by B4lamb at 15/10/2018 - 17:46
They may indeed be sharks but these clauses have been around for a long time. I am afraid Danielle has made a bad bargain. The law will side with the agents.

The question now is whether she gets rid of a good tenant and finds a new one through another source or pays the additional fee.

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