What are fair cancellation terms in Letting Agency contract?

What are fair cancellation terms in Letting Agency contract?

10:33 AM, 21st September 2022, About 2 years ago

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Dear All, I currently have 3 HMO’s managed by a letting agent who I have been with for nearly 11 years. The owner of the business has sold the company to another local agent. I was notified in writing this past Saturday (The current owner did call me the week before). The transaction has taken place and in effect, the new owner is running the business. It is a larger outfit than the previous owner. I have been assured by the previous owner that from a day-to-day basis things will not change.

I am taking this opportunity to address a few things I have never been happy with in the contract and the new owner is open to discussion in order to foster a long-term relationship. One area is the subject of cancellation of the management contract.

I am trying to establish what would be fair to the new owner and fair to me. At the moment I believe the cancellation charges are in favour of the agent. My understanding is cancellation fees only apply if the current tenants stay in situ after you give notice to the agency. If the tenant’s tenancy is ending and I do not renew there are no fees.

The current contract seems to indicate that for each tenancy the agent requires 3 months notice which must expire on or after 6 months into a tenancy. They want a letting fee which is equivalent to 1 months rent + VAT (minus any management fees paid to that point) plus they want a 1 month + VAT cancellation charge. I seriously am not happy with this as in the case of the new owner performing below par I could be potentially liable for £4200 + VAT to terminate the contract for a single property where the rent is £2800 per month with a 12-month tenancy and where 6 months have elapsed.

Two of my HMO’s are individual lets (5 rooms each) and this in itself is a complication as tenancies are all starting at different times.

Currently, I have invoked a clause which allows me to exit the contract by giving 3 months notice and liable to pay 1 month + VAT rent per each property. I have had to do this now as there was a 10-day restriction to notify the new owner after the business was taken over. As this is a more favourable clause than above I thought it was prudent to do so in case the new owner and I cannot come to an agreement.

I would appreciate thoughts from other landlords as to what would be a reasonable cancellation policy. The current one seems convoluted and although I do want a long-term relationship with the new owner (as he seems like he can do a good job and I have met him), I also need to be comfortable if things go pear-shaped and/or in some point in the future I want to sell the property with the tenants in situ?

What do you all think, please?



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