Tenant leaves with 3 years left but 4 years commission paid to agent?

by Readers Question

10:05 AM, 25th March 2020
About 2 weeks ago

Tenant leaves with 3 years left but 4 years commission paid to agent?

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Tenant leaves with 3 years left but 4 years commission paid to agent?

I’ve absolutely no idea what I’m to do with this – I let a flat last year (13 months ago) on a 4 year let to a company with a personal guarantee. The rent was paid for a year minus the commission (via the agent) the commission was fully paid (4 years’ worth and I did argue but told that this was their policy etc) after 12 months and I had one month full rent before the company stopped trading – this was nothing to do with the Virus crisis, but this is the excuse used now as the waters are very muddy with the agent as they are lumping this in with tenants walking away and handing back keys due to lost jobs and students returning home. This is not the case with me.

It’s quite an awkward situation in itself as the Guarantor is now saying he had no idea he was a Guarantor (signed contract) so is saying that the contract is null and void and he wants his deposit back – I doubt there is any point in chasing him – the flat is empty, good condition and he’s happy to hand back, but my issue is with the agency who have 3 years commission and I have no rent/tenant. The contract with the agents does state that if I break the contract or enact a break clause then commission is non returnable, but nothing about a tenant breaking the contract – any advise for me on this please. I am not taking it back, I am being given it back if that makes any difference.

The response from the agent is to give a 3 months rent holiday and then go for the directors/Guarantor if no further rent: Go for the directors anyway or take it back and be liable for all empty costs/council tax – they are not mentioning my request for return of commission

Many thanks

Harlequin Garden



Comments

Doug Ellison

8:55 AM, 26th March 2020
About A week ago

What does the contract with the Agents state?

Graham Bowcock

9:13 AM, 26th March 2020
About A week ago

Going back to the start, you say that the agent took commission for four years' rent as that was their policy; was it in their Terms of Business that you signed? They should only have taken this commission if it was agreed in advance. I am sure you are now wondering why you allowed this to happen.

Read the contract (agent's ToB) carefully to see what they are supposed to do and whether or not the tenant leaving is covered. If not, then your only option is a bit of emotional blackmail to persuade them to sort things out.

It sounds good that you have a PG from a director; surely the agency should be helping you in pursuing this. PGs can be delicate documents, but the agent should be giving you advice on the implementation, especially if they provided it in the fist place. If it's defective then they ought to be looking at their PI policy. Sadly, many agents to not fully understand how guarantees work.

If the company tenant is still trading then you could claim against it (as well as pursuing the PG). Again, something that a decent agent would be doing, especially if they have your money.

If the agent blanks you, then you can either cut your losses, get a new tenant in with another agent and move on, or get a solicitor to represent you.

Harlequin Garden

9:23 AM, 26th March 2020
About A week ago

Reply to the comment left by Doug Ellison at 26/03/2020 - 08:55
The only reference to this in my contract with the agent is that no commission is returned if I enact any break clause.

I'd getting more difficult now as the 'guarantor' who apparently didn't know he was a guarantor (but is now as of early March a director of the company) is saying that he will return the flat if I return the deposit, it had never entered my head to return the deposit. The agent is saying that the rent is one week late - which it is not, we are one week into the 1 month period. Lots of arguing but the biggest part of this claim for me is the large commission chunk. I've offered the agent the opportunity to remarket the place and use the commission they have as a credit but seems they are insulted I want them to 'do the work' twice.

Small fry at the moment but this is just the start of it having quite a largeish portfolio.

Harlequin Garden

9:28 AM, 26th March 2020
About A week ago

Reply to the comment left by Graham Bowcock at 26/03/2020 - 09:13
Under normal circumstances I would just move on - but we are not in normal circumstances we can't even do viewings - if we had people to view so reletting for the next few months is not a possibility as I'm sure you know. The Guarantor who is now a company director - weird as he wasn't when he acted as guarantor - has told me that the company is going into liquidation next month. I have a solicitor on standby with this but had hoped to sort it out myself with just the deposit and flat back rather than the guarantor now threatening to make me 'evict' him.

Vedran Beader

9:53 AM, 26th March 2020
About A week ago

I've had a very similar situation and found a resolution.

I paid 3 years commission for a tenancy which the tenant abandoned after 1 year. Apparently she only ever wanted a one year tenancy but signed a 3 year tenancy regardless.

Anyway, long story short, the agent offered to remarket the property with the commission already paid to simply replace the tenant with another.

I wasn't happy with the way they conducted business as it seemed they lied and covered up alot so I complained to the property ombudsman who ended up awarding me all the commission I had overpaid, plus expenses. Could be a way forward for you as it's free to arbitrate and seems you have nothing to lose by trying it. A solicitor will obviously cost you money you're not certain to recoup.

I learned not to deal with agents pressuring for a long term tenancy and always insist on 1 year max. However, nowadays I run my own in-house tenancy set up as the portfolio has grown considerably since then and with a bit of research, anyone can do this themselves saving £'000s per year. Good luck 👍

Harlequin Garden

10:00 AM, 26th March 2020
About A week ago

Reply to the comment left by Vedran Beader at 26/03/2020 - 09:53
Thanks, give me a bit of hope in these straightened times! I'm not pushing the agent at the moment as I'm hoping they'll deal with the deposit issue as they have a 'relationship' (yes sounds a bit dodgy) with the company let. When this is settled I'll go for the commission, I've a feeling we are looking at quiet times.

Where possible I do all my own lettings but for some reason there is a price ceiling where prospective tenants just won't come and come via an agent. As a rule I give them a very wide berth, and being in Central London rents are high.

Darren Peters

10:04 AM, 26th March 2020
About A week ago

My own view on this (and I'm not a solicitor or legal person so take with a pinch of salt...)

The agent isn't going to help you, they are clearly looking after their commission and nothing else. After this has been resolved don't use them again.

The guarantor isn't going to help you take money off him. Not remembering signing something is no excuse for anything. He/the company wants to walk away scot free.

Both company and agent seem to be pushing you to hand over money and walk away with the carrot of you getting the flat back.

Being mercenary how likely is it that could you re-let the flat in current lock-down circumstances? I suspect almost impossible. If you take it back you have the running costs, if you play the long game, the tenant is still on the hook for the running costs, at the least. Plus at time of writing tenant doesn't get 3 months rent free but a defacto rent holiday as you can't evict for the next 3 months. Ie in 4 or 6 months time they will have been building up debts with utilities & council tax instead of you and, with the help of your solicitor, the guarantor will be under pressure for 4 or 6 months' rent.

Nobody else in the scenario is on your side so get your solicitor involved. Don't "break the contract" before your solicitor advises as that gets the agent off the hook. Similarly don't return the deposit, see what your solicitor says first.

DO check with a solicitor, even if it's just damage limitation

Paul Shears

10:57 AM, 26th March 2020
About A week ago

Reply to the comment left by Darren Peters at 26/03/2020 - 10:04
Sound advice. 🙂

Nettie Osborne

19:56 PM, 26th March 2020
About A week ago

Reply to the comment left by Doug Ellison at 26/03/2020 - 08:55
By law, Property Agents are required to join a government authorised consumer redress scheme - find out which one they are with and contact them voicing your grievances. Good luck. Nettie

Martin Thomas

9:53 AM, 28th March 2020
About A week ago

Surely, if the contract with the agent doesn't say they can charge several years' commission up front and NOW, and their terms and conditions don't say it either, then I don't see that they have any right to charge it. That must give you grounds to sue them to return the overcharged deposit. The fact they have said it's their 'policy' wouldn't cut any ice in a Court unless they could prove they had communicated that policy to you in advance so the terms of the contract were clear.

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