Letting agent fees and Serving notice

Landlord Discussion
1

Hello, I have paid a letting agent a fee of 6% to find my tenants and set up the contract. All good!

But now I find that, if the tenants are to renew for another year, through me and not the letting agent, I still have to pay further 6%.

I don’t want to pay a further 6%, so the letting agent insists that I have to end the tenancy and they have to move out.

So, Do I have to serve a Section 21 on perfectly good tenants, who have a happy home, because the contract with my letting agent says I have to?

Is this ok, to ask tenants to leave for the reason that I don’t want to pay the letting agent an additional annual fee? I can do this, but it seems very unfair on the tenants. I can fill my flat no problem, so not worried about re letting.

Has anyone had the same experience? Any advice would be appreciated.
Many thanks

2

This is standard practice and will be in your contract with them I’m sure.

Just tell agent to not renew and the tenancy will default to periodic (no cost involved). This is better for you anyway. They are scumbags for not advising this. They cannot force a contract renewal at a fee.

Do you pay for a managed service or did you pay for tenant find service only?

3

The solution is simple and actually better for you. Don’t renew. Just allow the tenancy to go periodic, (month to month) and there will be no cost for the agent to claim. If they do try to levy a fee for this, remind them of the Foxtons case.

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Hi Mark, thanks for your reply, Yes it is in the contract, so I asked them what I should do and they replied:

“While the tenants remain in the property you are liable to pay fees to (us, the agent). To end this liability the tenancy needs to come to a complete end. To do this, you will need to give your tenants notice to vacate at the end of their contract by serving them no less than 2 rental months’ notice. During this 2-month period you can remarket the property.”

SO it sounds like they will continue to charge me a fee if the tenants stay? I paid for fully managed for 1 year (Covid nightmares) and then paid for a contract renewal-only in the second year.

So if I don’t renew the contract, there is no way that the letting agent can charge me (6%) if they want to go periodic.

What if I need to swap in a new tenant? They seem to be saying that I have to pay them if any 1 of the 3 tenants stay, even if I do a new contract myself?

Very much appreciate your advice.

5

Hi David, thanks so much for your advice.

What happens if we go periodic for a few months and then 1 person moves out and I need to swap a new person in?
Am I liable to pay for the other 2 tenants if i sign a new AST with them and a new person?
Please give me the name of the Foxtons case so I can look it up if poss.

Really appreciate your help. Many thanks.

6

This seems like a sloppy clause to me.

You could in theory end the tenancies and then get them to sign again with you. Other clauses may prevent this, but these type of clauses are viewed as unfair.

1 Like
7

Have a read of this thread, same thing been discussed at length;

8

Its possible that the clause you quoted is an unfair contract term, but you would need legal advice on that. Just google “Foxtons case”.

If you have a joint tenancy and one of the tenants wants to leave, then you may need a new tenancy agreement for everyone, although it is possible to use a deed of assignment to transfer the tenancy to the new group of tenants even with a periodic tenancy as long as everyone agrees.

9

Thank you for your email. I had actually already read it and am going to follow this route. My tenant’s contract is not up until Nov 2023, so I expect to pay the EA until this time, but after that nothing. I am in the process of transferring the property onto OR and of course will go to periodic come Dec 2023.

No doubt they will try to continue to try and extaught money from me, but I am ready for them.

Thank you again.

Adele Ajai-Ajagbe

10

Thank you so much for everyone’s help and support. I have taken your advice and tried to talk about this further to the Letting Agent Manager and asked the following. Maybe I need to get legal advice?

To the LA,
Please can you confirm which clauses apply to me having to pay you if the tenants want to remain? I think if I understand it correctly, this is only applicable if I renew the tenancy and not if they continue on the same contract on a rolling on basis?
Otherwise do understand this correctly? In order to avoid paying an additional 6% when the contract is up for renewal in September, you advise me to serve a section 21 on the current tenants, as the only way to end fees to Keatons?
Is this ethical? Please confirm what reason am I to give the tenants please?
Please also confirm that you want me to remove the current tenants as the only way of releasing myself from the contract.
I would also like to point out that the service has not been great with regard to advice on putting the rent up and also with the poor transfer of DPS, completely overlooked for 6 months.
Under the circumstances I would appreciate it, if you would confirm that this clause fee is waived.

And here is the reply. (Not answering any of my questions of course!)

Hi Claire,
The main relevant clauses from the terms of business are 11 to 13.
Landlord’s Obligation to pay the Essential Service Fee
11. If Keatons introduce a Tenant (“the Tenant”) who enters into a Tenancy Agreement (“the Tenancy Agreement”) to rent the Property either on his own or jointly with another person and whether directly or via an associated person or company, the Essential Service Fee (“the Essential Service”), becomes due to Keatons.

  1. The Essential Service Fee is payable to Keatons whether or not the Tenancy Agreement is finalised or negotiated by Keatons.

(a) Keatons may collect the Essential Service Fee from the first rental payment of the Tenancy Agreement.

(b) If Keatons does not collect all the Essential Service Fee from the first rental payment of the Tenancy Agreement, the balance of the Essential Service Fee must be paid by the Landlord to Keatons prior to the commencement of the Tenancy granted by the Tenancy Agreement.

  1. If the Tenancy Agreement contains a break clause and the Tenant or Landlord terminates the Tenancy Agreement in accordance with provisions of that break clause, subject to Keatons being entitled to retain a minimum fee of £1,200 inclusive of VAT, the Landlord shall be entitled to a pro rata refund
    of the fee from Keatons for the remaining term of the Tenancy Agreement. This refund will be payable after the end of the Tenancy or offered by way of a credit towards the next fee through Keatons. If the Tenant vacates the Property for any reason during the Tenancy, or the Tenant or Landlord terminates
    the Tenancy Agreement without the valid break clause included in the said Tenancy Agreement, then no pro rata refund will be paid from Keatons to the

Landlord for any advance payments made and any balance of fees due to Keatons on our Financial and Comprehensive Services are required to be paid in full by the Landlord.

Whilst the current tenancy continues a fee is due, in accordance with the terms of business you agreed with Keatons. This forms a legal contract between both parties, it’s therefore not a question of ethics.
I am not going to suggest a reason you provide to the tenants should you decide to give them notice, I don’t believe that to be appropriate - it will be your choice to do so.

I am satisfied we are not at fault given the terms agreed and the correspondence I have read that you had with XXX already on this matter when you decided to reduce service level from Comprehensive to Essential.

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