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 2 years 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

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Ian Cognito

21:56 PM, 12th January 2022, About 2 years ago

Reply to the comment left by geester24 at 11/01/2022 - 12:13
Forgot to add that either agents are getting tougher or my negotiating skills are waning. Despite property being in Home Counties, as opposed to Central London, I was unable to agree contract without a renewal fee.

Ian Cognito

23:59 PM, 12th January 2022, About 2 years ago

Reply to the comment left by Christopher Holden at 11/01/2022 - 13:15
The rent has now been transferred to me, less fees. I have not renewed, the tenants are staying and the tenancy has gone periodic.

As there was no mention in the original agreement that I signed stating that a tenancy lapsing into periodic is considered to be renewed, I will advise the agent that our agreement has ended and the tenant should pay me directly.

Wonder what the response will be?

Ian Cognito

0:17 AM, 13th January 2022, About 2 years ago

Reply to the comment left by ImpartialObserver at 12/01/2022 - 08:55
I absolutely agree that, other than finding the tenant 15 momths ago, the agent has not done a great deal and I would be better-off cutting out the middle-man.

I could advise the agent that they are no longer required to manage the let and save the 2% management fee, however, under the terms of the original agreement, the agent would argue that the 8% letting fee is payable so long as the tenant remains in the property.

In fact, I don't think the agreement is well worded from the agent's point of view, as it does not explicitly state that a tenancy lapsing into periodic is a renewal (which attracts a letting fee).

Furthermore, even if the agreement was "water-tight" as far as a perpetual letting fee is concerned, I think the days of this type of agreement are numbered as it is bound to result in tenants being given notice solely because the landlord wants to be rid of his commitment to the letting agent.


12:41 PM, 14th January 2022, About 2 years ago

Responding to Ian @ 23.59 on 12th ( and others):
Or, failing that, see if, like for us, there was a notice period such as 3 months to terminate, and then run it as a periodic yourself in the knowledge that as I understand it, although they'd only have to give you one month's notice of leaving, you only have to give them two, which gives us reassurance against large arrears in the event of our excellent tenants running into financial trouble.

I believe they are generally only good for sourcing a tenant, but for us Openrent does a better job at a fraction of the cost, because you want to vet them closely yourself anyway prior to a letting.
Almost all of the physical shop type agencies will disappear within 10 years, apart from perhaps really upmarket areas.
Someone mentioned tenants arranging gas certificates. Just arrange it yourself with your trusted engineer, and notify the tenants and agree a date that does not inconvenience them, with the bill paid by you by bank transfer on receipt of invoice.


15:07 PM, 14th January 2022, About 2 years ago

Reply to the comment left by Accommod8 at 14/01/2022 - 12:41
I also use OpenRent and find it v good value. Used to use Upad which had a few more bells and whistles but they went bust I believe. Of course this only really works if you have the time and experience and don't live too far from your rental. I reckon I'm a better judge than most agents and will ask pertinent questions rather than box tick to get my commission. If you need educating go on a course supplied by the NRLA for not much money and join to have access to their database and free advice line.


8:35 AM, 15th January 2022, About 2 years ago

Every agent I use in London charges renewal fees, and all of their contracts state this is due for periodic tenancies as well at the same rate, so I’m surprised that the original Terms you signed made no reference to this.
I presume their argument will be that it’s a periodic tenancy based on the terms of the original AST so their fee will still be due.
Many agents refuse to negotiate their fees unfortunately. I try to avoid where possible but sometimes I have had to resort to using them.
Others will agree to reduced renewal fees and capping them at a few years (if a tenant stays long term). But none will remove them altogether.
There are certain areas of the market where agents are still the best way to let. They get enquiries for a certain property and then show that same applicant all the other suitable flats so you simply get a lot more people through the door than relying on applicants only wanting to see you flat. I have a few very well presented flats that are on the outskirts of highly desirable areas. If you look on a map online you may think they are too far from your desired search area, but if an agent takes you round you see how nice the flats are, you get more space for your money and it’s only an extra 5 or 10 minute walk away from your ideal location. That’s why I think when I’ve tried to use open rent etc it’s never worked, but agents find me tenants really fast.


10:30 AM, 15th January 2022, About 2 years ago

AP- I am honestly pleased this works for you.
Of course it's like chalk and cheese comparing prime property in desirable parts of London, and most of Merseyside, in my case. Where you have a flat (set) fee for certain services, it adds up when you're comparing rental of say £550 pcm with say £2,450.
We have also had money held back by Countrywide through difficulties contacting their accounts dept. This was nothing other than holding onto our money until they could no longer continue bluffing. We also felt they were controlling everything, rather than serving their client in the first instance.
I just feel that taking a % fee is all they need in order to be profitable, so why is a renewal fee needed? It's not.

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