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Mr-Novice
22-02-2007, 10:35 AM
Dear all,

My estate agent is insisting that I sign a one year contract as opposed to my suggested 6months. The tenant has passed the reference checks and the agent said it was silly to sign a 6 months contract when you've to pay a renewal fee every 6 months :confused:

What is the difference and implications of a 6months contract compared to a 1 year contract. Does that mean if the tenant is bad I cannot remove them for 10 months to a year?

Any advice is greatly appreciated.

Paragon
22-02-2007, 10:54 AM
Dear all,

My estate agent is insisting that I sign a one year contract as opposed to my suggested 6months. The tenant has passed the reference checks and the agent said it was silly to sign a 6 months contract when you've to pay a renewal fee every 6 months :confused:

What is the difference and implications of a 6months contract compared to a 1 year contract. Does that mean if the tenant is bad I cannot remove them for 10 months to a year?

Any advice is greatly appreciated.

The normal procedure is to issue a 12mo AST with a 6mo breakclause. This means that you can issue a two month Notice to Quit in the 4th month to terminate at the end of the 6th month. The tenant also has the right to issue a termination notice either in the 4th or 5th month, depending on how the contract reads i.e. tenant either must give 2mo or 1mo notice.

jeffrey
22-02-2007, 11:20 AM
Agent can't "insist" on anything. You are the boss, the agent folows your instructions (not vice-versa), and - if the agent doesn't like it - tell him/her to, er, go away.

PaulF
22-02-2007, 11:40 AM
The normal procedure is to issue a 12mo AST with a 6mo breakclause. This means that you can issue a two month Notice to Quit in the 4th month to terminate at the end of the 6th month. The tenant also has the right to issue a termination notice either in the 4th or 5th month, depending on how the contract reads i.e. tenant either must give 2mo or 1mo notice.If you had followed my posts in the past, you would see this is dangerous advice as you can't impose any break clause on a tenant; it would have to be an "individually negotiated clause". What's more you do not serve a "Notice to Quit" on a tenant, it is a S.21 Notice which is a "Notice Seeking Possession", an altogether different Notice.

Paragon
22-02-2007, 11:42 AM
I think the agent, in this case, is actually trying to be helpful. The OP should simply tell the agent to put in a 6mo breakclause and that would eliminate the extra 6mo fees.

Paragon
22-02-2007, 11:44 AM
If you had followed my posts in the past, you would see this is dangerous advice as you can't impose any break clause on a tenant; it would have to be an "individually negotiated clause". What's more you do not serve a "Notice to Quit" on a tenant, it is a S.21 Notice which is a "Notice Seeking Possession", an altogether different Notice.

Please explain further. A six month breakclause is not being imposed, but mutually agreed upon.

PaulF
22-02-2007, 11:53 AM
You haven't mentioned anything about mutually agreed, all you have stated is for the landlord to insert a break clause. Please, say what you mean!

P.Pilcher
22-02-2007, 12:44 PM
For heavens sake! Is this agent a member of a recognised body?? A landlord is best protected against a problem tenant by issuing a 6 month AST ONLY.

IT DOESN'T HAVE TO BE RENEWED
After six months, the tenancy continues automatically as a statutory periodic one, landlord giving 2 months notice of termination, tenant giving one month. As Paul F says, break clauses are very difficult to enforce and totally unnecessary. This agent is merely trying to make money out of tenancy renewals and "protecting" his client by suggesting they are made less frequently. He probably doesn't realise why he is doing this, but just assumes that assured shorthold tenancy leases, like the commercial lease he has signed for his business premises has to be renewed.

What infuriates me is that I am a mere unqualified landlord, I have done what it says at the bottom of this post and therefore would appear to know more (in certain areas) about this business than some "professional" agents!

P.P.

Paragon
22-02-2007, 13:11 PM
As a landlord, I would not issue a 6mo contract unless I really wanted the tenant to leave at the end of 6mos.

The downside to issuing a 6mo contract is that the tenant can leave at the end of the contract without notice. I, for one, do NOT want to be in that position every 6months. I have better things to do with my life.

Paragon
22-02-2007, 13:50 PM
You haven't mentioned anything about mutually agreed, all you have stated is for the landlord to insert a break clause. Please, say what you mean!

The OP implied that this was a new potential tenant (he stated substantially that he had passed the reference checks). Therefore, negotiation to mutual benefit is still available to both tenant and landlord. If the tenant doesn't agree to a 6 mo breakclause, which I don't see why he wouldn't agree, then he can find another rental property.

The landlord has the same benefit as if it were a 6mo AST. The tenant has a benefit in that he also can leave voluntarily at the end of 6mo, but with notice.

Why you think a 6mo breakclause is unenforcable needs further explanation on your part. I will listen to your arguments and if you have any case history links, I would greatly appreciate your efforts.

P.Pilcher
22-02-2007, 14:02 PM
Life changes, circumstances change and so do tenants! One question I always ask my potential tenants is "How long do you think you will stay?" If the answer is a very definite six months then I am not very interested as I prefer, for obvious reasons, long term tenants. Their circumstances may change to the extent that they can no longer afford to pay their rent. I therefore want the option to be able to use a section 21 process with the minimum period of notice. On the other hand, if they are good tenants, they have a minimum of two months security of tenure should I want them to leave as, unlike some, I do not serve a s21 notice when a tenancy commences. If they are paying the rent and looking after my property, why should I want them to leave? It seems to work well for me. Occasionally I have a tenant that leaves after six months but this does not happen often. I had a tenant that left after 5 months, using her deposit to pay the last month because she lost her job and couldn't find another in time. What was the point in chasing her for a month's rent? She left the place spotless and beautifully redecorated. So she received a good reference from me when she eventually found another job and property to rent.

P.P.

Paragon
22-02-2007, 14:12 PM
pilcher -

Very well stated, but are you replying in the right thread?

Mr-Novice
22-02-2007, 15:58 PM
see below clicked twice .. sorry

Mr-Novice
22-02-2007, 16:03 PM
Thanks for all the feedback.

The agent has called me back, and asked me if i wanted a landlord break clause or a (landlord and tenant clause). I obviously picked the landlord clause for myself.

I phoned the agents and the introduction fee was 2.5 wks only and if I wanted full management 12% after. Because the renting price is lower than the advertised price I've opt out of the full management and will manage myself. The agent tried to raise the intro fee to 1 month and I was not willing to pay. They tried to explain because it was full managemt before so conditions have changed. I told them when I called in before it was always 2.5wks even when the agent visited the property. They told me since then the price has increased. I was not going to accept such an excuse and told them that the tenant has contacted me privately for a deal bypassing them. Because they're an ARLA agent I wanted to pay for the proper contracts to be drafted up but it seems like some people are not trustworthy. In the end I told them that they're basically breaking their code of conduct as an ARLA member. If I was as scrupulous as them, I would just do my own private deal with the tenant but I am a fair person and understand the work they've put in as well and willing to pay the originally agreed 2.5wks. In the end we compromised at 3 weeks.

I asked the agent for a template of the contract and they will not be supplying that until 2 days before the tenancy is signed which is in about 2 weeks time. I am starting to get abit worried with this ARLA estate agent.

P.Pilcher
22-02-2007, 16:49 PM
As an inexperienced landlord, I don't envy your position as you have a right to expect a better service than your receiving from your agent, particularly as they are ARLA registered. They seem to have misinformed you because of their own lack of knowledge. I normally use agents to find me tenants, it isn't cheap because of the work that they have to do. Once a suitable tenant is found, I contact same, they sign my AST and pay me their deposit and first month's rent at which point they receive the keys. I then pay the agent his agreed fee. Job done.
If I was you, I would get the name of this tenant and get them to sign my own AST (a 6 month one), however I appreciate that the agent may well not like this and, suprise suprise, his terms of business will not allow it! Also, as a novice landlord, I doubt you would be happy to do so in any case. Why can't these agents do the job properly?

P.P.

MrWoof
22-02-2007, 23:18 PM
Like everyone else, landlords learn by experience. The agent operates on your instructions, not the other way round. Insist on a six month agreement only, serve a section 21 when the tenant moves in and after the initial term let the tenancy go periodic if you (and the tenant) are happy. The agent wanting payment for 'renegotiating' is a scam operated by many agents. From the sound of this one, look for another agent but please, as a novice, use an agent even if it is only for the first six or twelve months and if you sign a contract with one, read it very carefully. One of the very few areas where I will disagree with someone like P.Pilcher is in the service of a section 21 on commencement of the tenancy. I always explain to the tenant that it is for my protection, I have had full rent paying tenants stop paying and HB tenants stop paying a top up, in these circumstances, a served and signed for S21 cuts two months off the repossession time.

Bel
23-02-2007, 19:07 PM
The agent has called me back, and asked me if i wanted a landlord break clause or a (landlord and tenant clause). I obviously picked the landlord clause for myself.



Members!!
Is this allowed? A break clause that only favours the landlord???
I thought that a break clause must be there for both parties.
Or is this ' subject to individual negotiation' regarding 'unfair terms' guidelines??

MrShed
23-02-2007, 19:18 PM
Definitely not allowed - you cannot put a term in that way.

Paragon
23-02-2007, 19:22 PM
Never heard of it. My breakclauses are mutually benefitting. It provides for Early Termination for the tenant should he need to leave before the 12mo term expires as well as for myself.

heather5
25-02-2007, 19:54 PM
Hi Mr Novice

Not sure whether this applies to you - but you seem to imply that the tenant passed the checks and the Agency gave them a 1 year agreement without your knowledge.

Has the tenant already moved in?

Has the agency already received monies from the tenant for the deposit and first month's rent?

If not, does the tenant have a moving in date from the agency?

The answer to these questions may impact on where you are now and what you can do about it.

My understanding is that the Agent acts on your behalf and with your prior approval. If they have failed to do this - you may prossibly be able to take some kind of legal action against them.

If the tenant has already moved in and has paid monies up front on the basis of a one year agreement - and has signed a contract - although you may not yet have returned it signed - I'm not sure where this leaves you.

Hopefully, once you clarify - more experts here can give you further advice.

They are good on this site - an I'm sure they'll advise you with this further information.

Otherwise, in my opinion, not as an expert - I do know people who have gone through the checks - passed them - been given in a moving in date - and then been told the landlord won't agree to them moving in. Under those circumstances - the Agency waivered the costs of checks etc - and they got another property.

Under those circumstances the landlord has backed out because a) selling his own property and was moving back into the home b) was selling the property outright c) had a family member moving in instead of prospective tenant d) had been messed about on the moving in date - such that it was over 3 weeks later than agreed.

Hope this helps.

P.Pilcher
25-02-2007, 22:40 PM
If the tenant has already moved in or has an AST signed by the agency, has paid monies, and received the keys, he has a binding contract out of which you cannot get! After all, how is he to know that the agent he assumed was acting on your behalf and under your instructions was not so doing?
If monies have not changed hands and therefore keys have not been handed over, you are in a stronger position.

P.P.