Rent being held back by agent after slipping on to periodic tenancy?

Rent being held back by agent after slipping on to periodic tenancy?

11:09 AM, 11th January 2022, About 6 days ago 17

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When starting out as a landlord 10+ years ago, I used letting agents to find tenants. One extreme annoyance was having to carefully read through (and often modify) each agent’s own tenancy agreement. After a year, I stopped using agents and worked with my own template agreement that I drew up with the help of a solicitor

Fast-forwarding to late 2020, for various reasons I decided to employ the services of an agent, once again. Times have changed in that I was unable to agree on a contract without a renewal fee. Nonetheless, I knew what I was letting myself in for and signed-up, after carefully reading through both the contract and the 12 month AST agreement.

Come renewal time, I was happy to agree to a further 12-month term at the same rent and so expected the same AST agreement to be used, with only a change to the date (along with modifications, if required to comply with new legislation).

However, when the agent presented me with the new agreement, I immediately noticed that it was different. My response was to email the agent, requesting him to send the agreement through again, but this time with all amendments and additions highlighted for my consideration. I received a phone call, was told that this was not possible, and was assured that the new agreement had been vetted by the company’s legal department. I told the agent that I would not sign without reading through all 30 pages and carefully comparing them with the existing.

The agent has chased a number of times and advised me that, by not signing, the tenancy has defaulted to periodic. From my side, that’s not a great problem, though I would prefer the security of a 12 month AST.

What is a problem is the last two months’ rent not having been received (despite being paid on time by the tenant to the agent). On quizzing the agent, I am told that this is “probably because no new agreement has been signed”.

I said that this was totally unacceptable and demanded that the rent be transferred, immediately. I did not mention the deduction of a letting fee.

My question to 118 members: What should I do next?

Ian Cognito



Comments

by TheBiggerPicture

11:49 AM, 11th January 2022, About 6 days ago

Nice name Ian😊

My 2c

Answering 'probably' is not a reasonable response.
You must be given a definite reason for the delay in your rent. Then you have something you can agree with or contest.
If the agent won't give you the reason, speak to their manager or accounts team.
In their initial agreement with you, they will probably state how long they will take to pay you funds. That is your basis for receiving funds. They they to point where on that agreement they can withhold your funds.

If you have more than one property, remind the manager(not agent who couldn't care) they will not be getting any other business from you if they are going to make things difficult.

Communicate by email, and if you have to chase by phone demand they summarise call in email.
It gives you a trail, and you can refer back to it when making indisputable points.

by geester24

12:13 PM, 11th January 2022, About 6 days ago

Also, Join the NRLA and get free telephone advice plus lots of downloadable legal forms etc.
Well worth the small joining fee. been with them for 20 years. I use their ASTs.
Is the agent part of a scheme for redress; Ombudsman,NAEA,ARLA. If not then move agents. Also, I often strike out clauses when they ask for renewal fees. Most will agree unless in some posh Central London addresses.

by Judith Wordsworth

12:22 PM, 11th January 2022, About 6 days ago

Tell the letting agent that they are unlawfully withholding the rent; that as they supposedly are acting for your best interests, as you and not the tenant are their client, to send the revised proposed tenancy agreement FOR YOUR APPROVAL by return. You could if you want tell them that you wish to use your own tenancy agreement.
You are actually better off, well in normal non-Covid times, having a periodic tenancy as had tenant, rightly or wrongly, has fewer rights than under an AST eg notice period.

by Christopher Holden

13:15 PM, 11th January 2022, About 6 days ago

Firstly as you have not signed a new agreement I would believe the agreement that you did sign is the primary document, they cannot force you to agree to a new contract without signing it, at best they should stop providing their service.

Secondly but as important imo, get a call recording app, I just got £60 from an energy supplier, r as I was messed around and lied to, as I had call recorded I had them bang to right.

by TrevL

17:58 PM, 11th January 2022, About 6 days ago

The renewals fees for new agreements is a nice money spinner for agents, i.e. change the agreements every 6/12 months then the agent can justifiably charge £100-£150 a go for something that they have imposed.

They have done it to tennants for years, and used the threat of eviction following a fixed term AST as an additional leaver. I guess with the fees ban this has meant that they just switch it onto the landlord instead.....gotta get that continual income from somewhere. The withholding of paid rent is new, but at least threat of eviction isn't hanging over you.

by Julie Ford

7:11 AM, 12th January 2022, About 5 days ago

Good morning Ian
Firstly, the agent seems to have forgotten they work for and on behalf of you as the LL

Secondly, there is no legal requirement for you to sign any renewal of you dont with to

However, it is best practice for the agent to review their AST annually as the laws & regs do change regularly so it is possible that an AST would be technically outdated after a year

As for withholding rent... that’s a No No
They have no legal right to do so
The AST is between you and the tenant, if the tenant has paid and they will not pass this on to you then they are breaching their own business terms and inadvertently causing your tenant to fall into rent arrears (as funds haven’t been passed to you)

I would write a formal complaint to the manager, then progress to the Redress scheme if you don’t get the outcome you want

I would also look as changing agents as they clearly work for themselves and not you as their client

by ImpartialObserver

8:55 AM, 12th January 2022, About 5 days ago

You're not obliged to renew the contract even if "the laws & regs do change regularly"

The agent has a fiduciary duty to act in your best interest, not theirs.

The tenant will likely prefer a rolling periodic as they can stay twenty years or more without having to stress each year about whether you are willing to renew. The advantage for you, if you have a good trustworthy reliable tenant that you wish to keep, is that they won't be regularly thinking about moving in case of an expected annual rent increase forced on them by the agent under threat of an S21 not authorised by yourself.

You could also, of course, pay the agent their monthly fee and for other ad hoc services separately and require the tenant to pay YOU the rent by standing order instead of the money going via the agent - their contract is after all with you not the agent. Then you can perhaps reassess exactly what value the agent brings to the table other than "collecting" this standing order each month. Ask yourself how many months rent arrears you might temporarily allow from a good tenant of ten years that fell behind and was likely to pay off the arrears when they got back on their feet - three months maybe? Now ask yourself how much arrears ten years worth of agent fees represents and what actual work they've done for that money and at what hourly rate? E.g. could your tenant have been trusted to arrange their own annual gas check at their convenience for free and simply sent you the invoice? Are you losing up to one-year-in-ten's rent simply to have an agent appear to do work for you when the biggest thing they ever did was simply the initial introduction and supposed vetting?

In these expensive times of increasingly unaffordable rent increases and greater risk of default isn't it time landlords started trying to cut out unnecessary middle-man costs rather than expecting tenants to magically come up with extra money that puts them at risk of first a small degree of shortfall, then, once the line has been crossed ever-increasing arrears?

by Simon M

11:34 AM, 12th January 2022, About 5 days ago

Your agent doesn't understand what an agent is - they should be working in your interests. I'd definitely change agent.

I had the same problem - corrected the agent's agreement, but they gave the prospective tenant their standard template every time. You can and must refuse to sign if you don't agree the terms.

Your agreement with the letting agent should specify how quickly they will transfer the money to you. This is a perfect opportunity to cancel the contract with least aggravation. The agent should be part of a redress scheme and will be required to have a formal complaints procedure. Request it, then raise a formal complaint to transfer the overdue rent. They'll know the redress scheme will decide in your favour so it's unlikely they won't repay.

Don't wait for the complaint process to finish. Use their failure to pay you as a breach of contract to terminate the contract or - if you prefer to avoid argument/counter-claim - give notice.

by Ian Cognito

21:43 PM, 12th January 2022, About 4 days ago

Reply to the comment left by TheBiggerPicture at 11/01/2022 - 11:49
Thanks for your advice. Although I did not receive a further explanation for the withheld rent, it has now been paid with a % letting fee and % management fee deducted.

The initial 12 month agreement was that the letting fee would be deducted at 0 months and 6 months, whereas the management fee would be deducted monthly.

Now that the tenancy agreement is periodic, it would appear that the letting fee deduction is being made monthly (i.e. as for the management fee).

I would argue that allowing the tenancy to become periodic is not renewing the tenancy and, therefore, a letting renewal fee should not be charged.

I should probably consult NRLA and make use of my membership!

by Ian Cognito

21:47 PM, 12th January 2022, About 4 days ago

Reply to the comment left by geester24 at 11/01/2022 - 12:13
I have been a member of (N)RLA for nearly 10 years and found their helpdesk useful, so will consult them, as you suggest. Thanks.

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