Selling to tenants – Letting agent wants 2% commission!

by Readers Question

10:46 AM, 22nd May 2014
About 7 years ago

Selling to tenants – Letting agent wants 2% commission!

Make Text Bigger
Selling to tenants – Letting agent wants 2% commission!

I have let my property for the past three years to the same tenants. My situation has now changed and I have decided to sell the property, giving my tenants notice to vacate explaining that I am selling the property.

My tenants have now shown an interest in purchasing the property, and I have also had an offer from a completely independent party before the property has even gone on the market with any agent.

The offer from the tenants is slightly higher, but having looked at my letting agreement with my letting agent it mentions that I would have to pay 2% plus VAT to the agent if the tenants decided to purchase even though the discussion has been between me and the tenant without the agents involvement at all.

This then makes the tenants offer less and not viable. I would prefer to sell to my tenants as I know they love the house and do not wish to move but unfortunately I do need to think of the finances.

The wording in the agreement is:
“In the event that a tenant or any person granted the benefit of the tenancy i.e an occupant introduced to you by the agent which he/she has been renting or had been renting for the previous six months, where the agent has been involved in the negotiations for the sale of the property we will charge a commission of 2% of the negotiated purchase price. The fee is payable on completion or on exchange of contracts if completion is more than six months after. all fees are subject to VAT at the prevailing rate”

My question is, Legally do these charges have to paid, as I think it is very unfair that the agent would receive thousands of pounds for doing nothing, when they have had a monthly fee for basically doing nothing except collecting the rent of the tenant for 3 years.

Thanks in advance for your help!

Maxtwo


Share this article

Twitter Facebook LinkedIn

Comments

Joanne kelly

16:46 PM, 6th January 2015
About 6 years ago

Hello
I am after some advice. I tenanted my property over 5 years ago and have just sold the property to my tenants. I have just received a demand for £2800 as a sales commission from the original estate agent who I used partially to find the tenant. I clearly signed a tenancy agreement where there was a clause which states that if a tenant they introduced subsequently bought the property then they would be entitled to a sales commission of 1.5%, no mention of a timeframe or whethernthry were involved in the sale.
The sale went through in October, today I have been issued with a demand to be paid in 3 days of 1% of the sale price plus vat. I am livid for the following reasons
1. Whilst the estate agent took the tenant around the property 5 years ago I negotiated the rent etc as the tenant was unable to reach the estate agent at the time,despite multiple phone calls
2. There was no contract in place at the time I sold the house as we had a private agreement in place as they wanted an rolling month contract
3. The estate agent only knew about the sale when I called them to arrange the repayment of the tenants deposit
They have not sent me any invoice previously and are now demanding payment for a commission on a property they have not been involved in for at least 18 months, never managed on my behalf and paid no part whatsoever in selling.
Where do I stand legally on this? I am incredibly frustrated and stressed out as I do no have the money!
Many thanks for any help or advice
Jojo

Neil Patterson

16:57 PM, 6th January 2015
About 6 years ago

Reply to the comment left by "Joanne kelly" at "06/01/2015 - 16:46":

Hi Jojo,

You may require legal advice rather than a layman's opinion.

Please see >> http://www.property118.com/member/?id=1945

Carol Thomas

18:16 PM, 6th January 2015
About 6 years ago

This happened to me many moons go, before protected deposits etc. I refued to pay the agent his 'fee' and for quite some time, I believed I had got away with it. Several months on, another tenant was unable to pay rent and the agent said he was waiting for him to get the council to pay it. This went on for a few months, then the tenant told me he was leaving and to use the deposit for his last month's rent.
He left, and I asked the agent for the monies owed me, he said there wasn't any because the council had never paid him, I subsequently found out that the council was never involved - the agent and tenant were in collusion. The agent took the equivalent money from him to repay what he thought I owed him on the sale of the other property!
Being green as grass, I never chased this up, just wrote it off to experience - an expensive lesson!
Take professional advice!!!

Neil Patterson

11:12 AM, 7th January 2015
About 6 years ago

Reply to the comment left by "Joanne kelly" at "06/01/2015 - 16:46":

Hi Jojo,

Have you checked the relevant clauses in the contract and are you able to copy them out on the forum or indicate what they say.

It is not really possible to give contract advice without having seen the contract or at least that section.

Have you also sought legal advice yet please see >> http://www.property118.com/private-prosecutions/69701/

Steve From Leicester

17:22 PM, 7th January 2015
About 6 years ago

Hi Jojo,

Essentially you signed an agreement which said that if you sold a property to a tenant introduced by the agent you had to pay them a sales commission.

Regardless of whether you feel its right or fair, and whether you realised at the time, you agreed to this contract term, and unless you can demonstrate that its in some way unfair you're liable for it.

However, I strongly suspect that if you negotiate with the agent you'll be able to reach a compromise - in fact, unless it was a typo the agent already seems to have charged 33% less than stated in the contract (1% instead of 1.5%).

Most of us agents are fair and reasonable people (contrary to what some people think). We tend to take a dim view of people who try to cut deals behind our backs to avoid paying us, but when someone says "Sorry, hadn't realised the implications of the agreement I signed, can we come to a compromise" most of us will play fair.

Simon Topple

22:55 PM, 7th January 2015
About 6 years ago

I believe there is an ongoing case regarding this with Foxtons - my understanding is a number of cases with similar circumstances (tenant find contract with follow on commitment such as dubious repeat fees) are being held until the foxtons case has been resolved.

Joanne kelly

17:00 PM, 8th January 2015
About 6 years ago

Thank you everyone for all your help and advice. I have won my battle with the estate agents and they will not be pursuing this further!
As advice for anyone else in this situation - fight your corner even if you have signed on this. Unless the agent has specifically brought it to your attention, my understanding is that they are falling foul of current guidelines.
Thanks again everyone.

lulu 8

22:46 PM, 13th May 2015
About 6 years ago

Hi Joanne,

Congrats for winning your battle! I am in a very similar situation to you, selling to my tenants of 3 years but the agents are trying to claim 2% commission (I signed an agreement which was just to find a tenant, so I have been paying monthly letting fees, but I manage the property myself). I quoted the foxtons/Office of Fair Trading ruling that it was deemed that these charges were unfair and not binding even if we did sign a contract, but they are not backing down. Can I ask what did you do to win your case?

thank you.

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Could your buy-to-let company share structure be better?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More