Last year, I rented my flat through a local estate agent on “Letting Only”, and they found me a tenant. I currently manage the rest, including rent collection, repairs and maintenance etc.
It’s been a year since then, and this week, I received an invoice from the estate agent on “Renewal Fees” that I need to pay each year. I was shocked to hear this, which was never mentioned to me, and they are not providing me with any value in return for the renewal fee I need to pay them till tenants are there.
The renewal fee does not relate to contract renewals etc. It’s just a royalty income that I need to pay them.
They have sneaked the ongoing renewal payment into a clause that is not clear.
Is it a standard market practice to pay a royalty income for doing nothing? Have any faced similar issues with an estate agent? How are my options here?
I would say if the term is ‘unclear’, then dispute it on this basis. If if is clear, and you have agreed to it, then lesson learnt, to read any contract T & C’s in more detail in future.
My argument is that the “unless otherwise agreed” in the clause is the individual negotiated clause that was the x% upfront fee. So this is what I understood from the contract, as the renewal fee was never mentioned to me.
LETTING ONLY (Basic) Commission
3. You are responsible for paying our Commission at the rate of y.00% including VAT (y% + VAT) (unless otherwise agreed) when any person, company or other organisation enters into a binding contract for the occupation of the Premises where they do so as a result of: a. a viewing conducted by us; b. sight of any marketing or advertising material produced by us or by our instructions; c. by way of an introduction from an existing occupier for which we have previously charged a commission; or
This Commission remains due and payable in relation to any extension, renewal or continuation of the occupancy contract whether or not we are the effective cause of the said extension, renewal or continuation and for the period of time any such party or their assignees, subtenants or successors in title continue to reside in the Premises. Our Commission is payable whether or not we are the effective cause of the transaction. By signing this Agreement the Landlord gives us the authority to deduct our Commission, fees, expenses and any other costs from any monies belonging to the Landlord or any deductions from the Deposit agreed by the Tenant for any property owned by the Landlord where we are or were acting on the Landlord’s behalf.
Individually Negotiated Clauses: Lettings fee is x% + VAT taken upfront
I’m still not clear on your situation. You say that you are doing all the work and that the agent only found you a tenant. That would typically be a “Tenant find” contract. However, what you’ve quoted seems to be basic management where you’d pay 12% on each month’s rent for them to manage the let.
In relation to this phrase:
has a fixed term just ended? If so, what does the AST state happens when the fixed term ends. If it says it becomes a statutory periodic tenancy then that is a new tenancy and the 12% fee would apply.
The bit referring to 5% seems to be their fee for any clauses you want to vary or add prior to the AST being drawn up.
Its a typical “Tenant find” contract that I wanted with the estate agent, so not sure why I should be paying them a royalty to them for doing nothing after end of the AST. The 5% fee is what I paid after they found me the tenants.
The fixed term just ended, and now the statutory periodic tenancy started. Its unfair that the estate agent never mentioned to me about the on-going costs that I need to pay to them.
Its pretty clear in the contract that the fee is for the duration of the tenants stay, so I’m not sure where your confusion arises? Its your responsibility to read and understand any contract before you sign it.
Having said that, I think parts of that clause may be unfair and unenforceable, but you would need proper legal opinion that you can rely on if you intend to challenge it in court.
Yes. One-off fee of 5% to value of monthly rent that I paid last year.
Now, this year they sent invoice for 3% per month of rent (payable quarterly) at start of SPT. I do not know where this 3% came from, and no where in contract it states about payable quarterly etc.
I relied on the goodwill of the estate agent when he discussed with me, and send me the commission rates in the email where nothing was mentioned about renewal costs.
Thanks. I agree its my responsibility for the contract.
right… so I wouldn’t pay that until they can point out the clause in the contract where this is stated. I would take a paper copy of the contract into the office and sit down with an agent to clarify this. In person is always easier.
Still not sure what you mean by this because you said that you paid it in advance but this implies that you paid it at the end of the year. Is this correct: before the tenants moved in, we did a 12 x monthly rent calculation and then I paid a fee of 5% of this.
OK, so according to the contract, you should pay this twice: once when the AST starts (which you did) and once when the SPT starts (which you are due to do now). According to what you’ve quoted, both fees should be at 12% so if they levied the fee at 5% previously and are offering you 3% now then you are benefitting.
However, I would want to know in writing that this is not an annual fee as I suspect it might be based on the “continuation” wording in this clause:
If so, that’s something I would want to get legal advice on challenging because that’s going to eat into your profits.
I also wonder what the contract says about cancellation. I do hope you can cancel this without penalty. If you can, I would give notice to do so immediately as you are not relying on them for any services anymore.
I wouldn’t give the agents that much credit. The wording is pretty obvious and careful reading of the contract would have flagged it and told the LL that they weren’t worth dealing with. Unfortunately, these forums see plenty of examples of people signing things they either don’t take the time to read or understand thoroughly. This is another to add to the list.
Google the Foxtons case. I believe renewal fees when the agent is not involved in the ongoing management and we’re doing nothing for the money were deemed to be an unfair contract term.
Again, it’s unclear what you mean. The agent plainly told you about renewals costs when they gave you a contract that said a fee was
However, the current situation is not a renewal but creation of a new SPT once the fixed term of the AST has ended. I would take this to be the “extension” part of that clause.
And again, we still don’t know why they haven’t charged you the 12% (which was y fee in your now edited quote from the contract with the agent) instead of the 5% i.e. the “x%” fee. Little of this makes sense both from a contractural POV or what you’re describing as the fees they’ve actually levied.
