Letting agent renewal fees in the London area

[happybunny]

Hi everyone
I'm new to the forum and a relatively new landlord. I'd be grateful for any advice/experience of agents' renewal fees. I'm paying 9% for them to find me a tenant, credit check them and draw up the tenancy agreement (one year) but am managing the property myself. They're trying to charge me 9% on renewal too but I know this is over the top and I should be getting a reduced rate. What sort of figure should I be aiming for? Thanks!

[Paul_f]

9% of what? A month's rent, a year's rent!

"Renewal fees" have to be "reasonable" and reflect the amount of work undertaken. Proper renewal means the drawing up of a new tenancy agreement otherwise all you end up with is a periodic tenancy and there's absolutely no need for anybody to do anything.

As the tenancy is a let only, then there shouldn't be renewal fees as the agent's involvement ceased when the tenant took up the tenancy. It's just a way of trying to make extra income for no effort, on which the OFT frowns.

Your terms of business agreement with the agent should not extend beyond the introduction of the tenant for "let only"; they can't have it both ways - they either just introduce a tenant or they manage it! If a term is unfair or onerous it is open to challenge by yourself via your local Trading Standards Office.

[happybunny]

Hi Paul
We're talking % of monthly rent here. As the tenants are only just starting their first year's tenancy, I won't know whether how long they want to renew for - 6 months, a year or revert to a periodic tenancy - until their year is up. Either way, there won't be a great deal of work for the letting agent but it seems to be the norm to pay a renewal fee in London/Home Counties. I doubt whether agents in my local area would be interested in taking it on without any renewal fee at all. (It's a buyer's market).

I've since got the agent down to 6% and if the market is healthier at renewal can always weigh up whether to find a new tenant via another agent or renegotiate.

[Paul_f]

It's long been a tradition for London agents to charge "renewal fees", but if the landlord has instructed an agent to find the tenant only and not to carry out any management then their contract automatically ends with the landlord when the tenancy starts. They can't therefore demand any renewal fee if the tenant stays on, on a periodic tenancy. Nor can they charge you if you decide to draw up a new tenancy without their help, no matter what their terms of business states, as their contract with you ended at the beginning so to speak. They can't do anything without your further instructions, and of course you're not going to give them any are you?.

They of course will try and charge you but just refer it to your local Trading Standards Officer and see how they (the agent) reacts to it!

[Esio Trot]

Whilst I acknowledge Paul_F's knowledge in many areas of landlord/tenant law and regulations, I am wondering what his comments would be to the conversation I had recently with my local TSO. It provides an alternative approach to that which Paul suggests might happen.

They took the view that the relationship between landlord and agent was not so much of a seller/consumer, but more of a seller/buyer of business services. The reason for this was that landlords were regarded as operating as a business, and therefore caveat emptor took greater precidence in this than it would in a retail situation. Whilst they would consider unfair terms in contracts legislation in relation to a landlord/agent relationship, it would not be pursued as rigorously as with, say, a landlord/tenant.

[Paul_f]

Fair comment and you're almost right.

If a landlord lets through an agent the agent is "in business" and so is the landlord if they have a portfolio of let property, rather then just letting their main home as a one-off.

So the trader/consumer relationship is not the same when the former situation is in operation as both are traders.

My comments however still hold good as it's about contract law and not anything to do with any relationship between parties.

Ask any lawyer who knows their stuff about let only instructions and when the contract ends with a landlord! It's as I've stated!

[sheratonestates.com]

Hi everyone
I'm new to the forum and a relatively new landlord. I'd be grateful for any advice/experience of agents' renewal fees. I'm paying 9% for them to find me a tenant, credit check them and draw up the tenancy agreement (one year) but am managing the property myself. They're trying to charge me 9% on renewal too but I know this is over the top and I should be getting a reduced rate. What sort of figure should I be aiming for? Thanks!

Hi, 9% is far too much for just introducing a tenant! For a one off fee of 2 weeks rental, we introduce a tenan for you, draw up the tenancy agreement and credit check the tenant. We Manage properties from just 5% !

[Paul_f]

Look Sharon; this is a forum not an advertising plug!

So your rates are so much lower than somebody else's, so what! The other agent might offer better value!

When punters start choosing agents on their (low) fee level then we're in trouble. When a potential landlord asks me what my fee will be, I ask them what they are expecting for it - good value or a "competitive rate", the former never fails to win a good instruction. Of course what I can offer that my competitiors can't are a host of qualifications!

Undercutting the competition is for fools. Why work twice as hard for the same remuneration? Are my fees low? No! is my knowledge and service good? Need you ask! Do I work hard? Not particularly. Do I work effectively? Damn right I do! Am I modest? I have nothing to be modest about!

[SteveP]

For a one off fee of 2 weeks rental, we introduce a tenan for you, draw up the tenancy agreement and credit check the tenant.

Pretty typical rate for a London agent if you negotiate I have found and just don't accept renewal fees. If the agent wants them, go elsewhere.

Letting agents are ten a penny, there probably fewer barriers to entry than any other business, and quality is the real issue.

[mjpl]

Paul,

Personally I like the very cheap agents. Once they have messed up, we get their Landlords for life.

[Tax Accountant]

To Paul F.

Hi Paul, I have a property in London and the agent charges 10% + VAT for collecting and passing the rent to me. They do not manage the property at all.

My tenant has been in place since March 2005 under a 12 month AST. The tenant is very good and would be happy to pay directly to me by standing Order.

The agent's terms and conditions states that commission is payable throughout the term of the tenancy agreement. It also states that rental commission is payable on each and every renewal or extension of the term whether negotiated by them or not.

Could you please confirm:

(1) Am I bound to carry on paying the commission for the duration of the initial contract of 12 Months?

(2) Am I bound to keep paying commission after the end of the initial term if I renew the lease with the same tenant and collect all rent directly?

Ramnik

[justaboutsane]

How can you say that the agent does not manage the property for you when they collect the rent and pass it on to you??

Do you mean they do not carry out maintenance?

Please clarify!

and in relation to your questions... it all depends on what it states in your contract with the agent.

[Paul_f]

Hope this helps a little:

To Paul F.

The agent's terms and conditions states that commission is payable throughout the term of the tenancy agreement. It also states that rental commission is payable on each and every renewal or extension of the term whether negotiated by them or not.Only if they continue to collect the rent if it becomes periodic, but why don't you cancel with the agent after 12 months has expired, and draw up a new AST with the tenant thereafter? They won't be able to do anything about it, provding you give them the required notice to cancel your terms of business contract. 10% seems a lot just to collect rent which is probably by standing order anyway!

Could you please confirm:

(1) Am I bound to carry on paying the commission for the duration of the initial contract of 12 Months? Possibly - but it's more about the terms of business you have between you and your agent!

(2) Am I bound to keep paying commission after the end of the initial term if I renew the lease with the same tenant and collect all rent directly? No! (See the above)RamnikI should point out there has to be a cancellation clause in your agreement with the agent otherwise you can cancel it at anytime without notice and without future liability.

[Tax Accountant]

Hope this helps a little:
I should point out there has to be a cancellation clause in your agreement with the agent otherwise you can cancel it at anytime without notice and without future liability.

Thanks for the reply, Paul. This helps a little. I will contact the tenant and arrange to collect the rent directly. I will then notify the agent that I don't require their services anymore. I have no doubt that they will want the full commission for the rest of the 12 months tenancy agreement even if I collect the rent directly. Equally, I have no doubt that they will try and collect commission on renewal of the tenancy with the same tenant even if I attend to all this myself.

I will keep you posted.

Ramnik

[LawrenceL]

Hi everyone
I'm new to the forum and a relatively new landlord. I'd be grateful for any advice/experience of agents' renewal fees. I'm paying 9% for them to find me a tenant, credit check them and draw up the tenancy agreement (one year) but am managing the property myself. They're trying to charge me 9% on renewal too but I know this is over the top and I should be getting a reduced rate. What sort of figure should I be aiming for? Thanks!

Hi, there. I'm approaching my third renewal with a letting agent. (I'm a landlord). I signed a one page 'fee agreement' document with the agent which as above says they will charge again if the contract is renewed- another 10% of the years rental income. Last year I negotiated it down to 8%. This year I'm fed up. They do nothing (it's not a management contract)- I never even got a copy back of the resigned tenancy agreements for last year and it may even be that they were never resigned by the tenant! The tenant and I were considering doing a 'fake leaving' - doing everything bar moving out, in return for which I would reduce his rent slightly. Reading all this though makes me think I should just inform the letting agent that I simply no longer require his services (as has been suggested) and redraw up a contract between myself and the tenant. BUT how binding is that original fee agreement. If anyone can clarify I'd be very grateful. LawrenceL

[sober]

Look Sharon; this is a forum not an advertising plug!

So your rates are so much lower than somebody else's, so what! The other agent might offer better value!

When punters start choosing agents on their (low) fee level then we're in trouble. When a potential landlord asks me what my fee will be, I ask them what they are expecting for it - good value or a "competitive rate", the former never fails to win a good instruction. Of course what I can offer that my competitiors can't are a host of qualifications!

Undercutting the competition is for fools. Why work twice as hard for the same remuneration? Are my fees low? No! is my knowledge and service good? Need you ask! Do I work hard? Not particularly. Do I work effectively? Damn right I do! Am I modest? I have nothing to be modest about!

Hi Paul,

I agree with you that this is not a place to plug an add. However it is a little harsh. Letting fee of just 2weeks by smaller agencies is quite common and to acknowledge that is quite harmless. I have seen better service from smaller agencies than many of the big names who charge 8 % to 12 % and try to lock you in to boot. And if teneant leaves early or leave errears they don't even refund part of the fee.

Comparing your excellent service to that of letting agents is like comparing quality wines to ribena!! :cool: Where there can be enormous difference to good legal advice - there is not much to chose between two good letting agents, except for the fee - and from what I have seen and heard - the more grabbing they are the worse their treatment of the landladies.

Cheers :)
Mariam

[Tax Accountant]

Hi, there. I'm approaching my third renewal with a letting agent. (I'm a landlord). I signed a one page 'fee agreement' document with the agent which as above says they will charge again if the contract is renewed- another 10% of the years rental income. Last year I negotiated it down to 8%. This year I'm fed up. They do nothing (it's not a management contract)- I never even got a copy back of the resigned tenancy agreements for last year and it may even be that they were never resigned by the tenant! The tenant and I were considering doing a 'fake leaving' - doing everything bar moving out, in return for which I would reduce his rent slightly. Reading all this though makes me think I should just inform the letting agent that I simply no longer require his services (as has been suggested) and redraw up a contract between myself and the tenant. BUT how binding is that original fee agreement. If anyone can clarify I'd be very grateful. LawrenceL

I think Paul's replies above are quite clear. Just write to your agent and cancel their services.

Ramnik

[Tax Accountant]

Hi, there. I'm approaching my third renewal with a letting agent. (I'm a landlord). I signed a one page 'fee agreement' document with the agent which as above says they will charge again if the contract is renewed- another 10% of the years rental income. Last year I negotiated it down to 8%. This year I'm fed up. They do nothing (it's not a management contract)- I never even got a copy back of the resigned tenancy agreements for last year and it may even be that they were never resigned by the tenant! The tenant and I were considering doing a 'fake leaving' - doing everything bar moving out, in return for which I would reduce his rent slightly. Reading all this though makes me think I should just inform the letting agent that I simply no longer require his services (as has been suggested) and redraw up a contract between myself and the tenant. BUT how binding is that original fee agreement. If anyone can clarify I'd be very grateful. LawrenceL

I think Paul's replies above are quite clear. Just write to your agent and cancel their services.

Ramnik

[LawrenceL]

I think Paul's replies above are quite clear. Just write to your agent and cancel their services.

Ramnik

Dear Ramnik
Thanks for the reply. I'll either not contact the agent at all or inform them I'm terminating the contract- I feel like they're asleep anyway and writing to them will put them into action. My fee agreement has no cancellation terms whatsoever on it, which, according to PaulF means that I can cancel it without any notice. I seems too simple and makes me feel there must be a catch somewhere.
I'll be interested to know how your extrication process goes.
LawrenceL

[Pob]

if the landlord has instructed an agent to find the tenant only and not to carry out any management then their contract automatically ends with the landlord when the tenancy starts. They can't therefore demand any renewal fee if the tenant stays on, on a periodic tenancy. Nor can they charge you if you decide to draw up a new tenancy without their help, no matter what their terms of business states, as their contract with you ended at the beginning so to speak.
First of all, hi, and I hope it's not considered bad form here to resurrect an old thread like this.

Paul, I'm very interested in what you have to say on this, as I've just lost a case in the Small Claims Court on this very issue. I instructed a London agent to find me tenants but made it clear that was all I wanted - the agent doesn't hold the deposit, collect rent, or manage the property in any way.

Lo & behold, a year after I thought we'd concluded our business this agent comes after me for exactly the same commission as they'd had a year previously.

I tried writing to them to terminate any contract between us; they said I couldn't do that and owed them the money. I pointed out that I'd asked them to do no more than find me tenants and had when talking to them used phrases like 'one-off fee' in relation to what I expected to pay; they said I'd signed the terms & conditions which were in plain English. I pointed out that over £1700 a year was a hell of a lot to charge for sending out a couple of letters which I hadn't asked for in the first place; they said I'd signed the terms & conditions which were in plain English (they ended up saying that a lot).

I could go on; but the long & the short of it is: the judge found in favour of the agent, saying something to the effect that commission isn't paid on the basis of amount of work done and - you guessed it - I'd signed the terms & conditions which were in plain English.

And now, of course, they're coming after me for the same amount all over again.

I'd love to discover that you know something the judge didn't. Do you know of some case or something that I can look up which might support me in trying to get out of this situation? And does anyone else who's posted here have an update that might be of interest?

Cheers

Pob

[pms]

Doesn't this phrase come up at lot especally where letting agents are involved.Won't get off there ar--s,devoid themselves of all responsability, charge extortianate fees.I look forward to the day when the OFT finally come to their sense's and investigate the role of the letting agent.As it say's money for old rope.And perhaps one of them can justify their fees because I haven't found one yet who can:D

[rachie]

Hello,

Was wondering if someone could help me. I have been reading these threads and found it very intersting as I am in a similar situation. I am a Landlord and used an estate agent to find a tennant over 12 months ago. The agent just found the tennant and did not manage the property, only held the deposit and collected the rent visa dd.

When the initial 12 month tenancy expired we approached our tenant and arrnaged a renewal between ourselves and signed a new tenancy agreement for 6 months. We told the agent that the tenant had moved out.

However I just received an email from the agent saying that they had called the tenant who had confirmed that they were still living in the property and they therfore want us to 1700 pounds renwal!

In the previous threads Paul has said that as they havn't managed the property then the inital agreement with the landlord in terminated. Are there any clauses in the contract that could mean this is not the case?

How could the agent prove that the tenant is still living in the property. If we just deny it do they have rights to investigate further?

If we were taken to a small claims court, would we be found to have breached our contract? If so what are the consequences?

Are you allowed to name agents on this site? as I wanted to try and find someone that knows about the agreement of this particular agents.

I'd be really grateful if somebody could give some advice : )

Thanks

[DamianG]

Your spelling is awful on your website...............how can you expect people to take you on if you cannot spell ????????...................I hope you do not make mistakes in your legal papers:mad:

[gingerlion]

Its Foxtons because i got the exact same email saying they phoned the tennant who confirmed he still lived there.

How long until they take you to court? Would i have to pay any extra fees if I lose? and anyone know what happens if i get summoned when i live in Australia? do i have to fly home?

How did or can they prove the tennants are not there if i say its empty or i moved in.

or can i say they moved out then came back for 2 weeks and are now moving out again.


My tennants have only been 2 months over thier 12 month contract but foxtons want a years fees at 12% + vat for doing nothing.


should i just pay them asap before they take me to court? I cant find any examples of people winning this..

[Paul_f]

Foxtons received some very bad publicity on national TV earlier this year for their (alleged) underhand practices and secret filming seemed to confirm they were not the most honest of agents. There have been occasional moans about Foxtons on this site before and as it is rare for any agent to be named then there's probably "no smoke without fire".

Try emailing david@painsmith.co.uk or his mum, marveen@painsmith.co.uk who will be able to represent you in court if you need them to. They shouldn't be expensive and if they win, should recover your costs for you.

[Uncle Fester]

Its Foxtons because i got the exact same email saying they phoned the tennant who confirmed he still lived there.

How long until they take you to court? Would i have to pay any extra fees if I lose? and anyone know what happens if i get summoned when i live in Australia? do i have to fly home?

How did or can they prove the tennants are not there if i say its empty or i moved in.

or can i say they moved out then came back for 2 weeks and are now moving out again.


My tennants have only been 2 months over thier 12 month contract but foxtons want a years fees at 12% + vat for doing nothing.


should i just pay them asap before they take me to court? I cant find any examples of people winning this..

So, you’re on a periodic tenancy!

[Paul_f]

Look! The OFT are very keen to prevent the public being exploited by charging for services that agents don't actually "supply"

You will have to approach your local Trading Standards Office as the OFT probably won't deal with you directly.

As I have said Pain Smith solicitors have maintained that you do not need to pay an agent with whom you had a "let only" agreement, because as soon as the property is let then the contract should end.

The agent is not required to do anymore so why should they charge another fee of £1,700? Definitely not right!

[gingerlion]

Has anyone got any more knowledge on these cases?

What I really need to know is how would Foxtons be able to prove the tennants lived there and not me?

[Uncle Fester]

Has anyone got any more knowledge on these cases?

What I really need to know is how would Foxtons be able to prove the tennants lived there and not me?

electoral?