Terminating Agency Contract – Can you tell me how to terminate my contract with my letting agent? The contract has been running for 5 years, but I am now unable to afford the 15% commission I am being charged. There was nothing in writing.
This is a common question we get asked at LandlordZONE. Landlords often wish to terminate their letting management contract, either because they feel the agent is not doing a good job, they cannot afford the fees, or the landlord just decides they have enough experience to do their own management.
A let-only arrangement automatically terminates when the letting is complete, so in those cases there is no problem, providing the landlord has not agreed to anything in a written contract with the letting agent regarding renewals, renewal fees etc.
The Foxton’s case ruling had a bearing on renewal fees but only in as much as these should not be unreasonable, with no hidden terms tucked away in the small print.
Where a written contract exits between the landlord and his/her agent the landlord has already agreed to any terms in the agreement and providing they are reasonable, will be contractually bound by them.
In the case of a management arrangement it is usual for landlord and agent to agree by means of a formal contract, though sometimes it is the case that no written agreement exists.
Every written contract should include a termination clause stating what action is required by either party to terminate. Again, this must be reasonable.
However, when the contract is verbal there are no specified termination rules, renewal fees etc – it’s just an opened ended arrangement where the landlord is expected to continue paying management fees.
If it came to a legal argument a court would normally decide what contractual terms should be implied given the actions of the parties and what is reasonable in the circumstances given normal business practice.
In this case a reasonable period of notice in writing would usually be considered appropriate, nominally one month, especially if the agent pays the landlord monthly rent. However, if payments are quarterly, it could be argued, notice should be this length.
Landlords should bear in mind when agreeing contracts with their agents that it’s best to have it in writing and caveat emptor – buyer beware – read the small print, negotiate terms before signing if you are not happy, and ideally deal only with agents of repute. Look for agents who are members of one of the recognised professional associations and The Property Ombudsman Scheme.
©LandlordZONE All Rights Reserved – never rely totally on these standard answers which apply primarily to England and Wales. Before taking action or not, always do your own research and/or seek professional advice with the full facts of the case and all documents to hand.