I currently let three properties through an estate agent. I pay 8% finders fee and 5% contract renewal fee per year. Since the new law came into effect, meaning that fixed term tenancies are not allowed, my agent states that a continuation fee will still be due as per original agreement (Per year). I take care of all the maintenance of the properties, so in effect I will be paying them 5% for doing absolutely nothing. Is this correct?
I use estate agent to find new tenants for a fixed fee Then do all the rest myself I never did renew a contract after a year, always let them go periodic. Simples. Question it. Does your contract with them mention a continuation fee?
RRA means agents have lost a proportion of their income overnight. They will obviously try inventive ways to try and maintain their income but what you have explained takes the biscuit. It can’t be legal so I would be telling them where to go.
Best!
If there is no contract renewal they cannot charge 5%.
Read your terms and conditions . There probably won’t be an allowance for a unilateral change in contract .
If they do it’s a different story but likelihood is they don’t as it would be classed as an unfair term, which you can also challenge .
Right to them and tell them that they cannot unilaterally change the terms and conditions without your consent .
Explicitly write to them and tell them that you don’t accept their terms and conditions .
If they do charge you tell them that you are cancelling the contract and send them a recorded delivery letter stating such ( a court will likely consider this charge a repudiatiory breach ).
When you write to them reference the consumer rights act 2015 if you do business in person . If you do business as a company then quote the sales and goods act .
When you email your response visibly include the cc to consumer marketing authority.
let them know you mean business .
Under contract law they can’t charge for something that does not exist and they cannot unilaterally change contract terms without your permission .
Read the contract you have with the agents
You have said the 5% fee is to renew tenancy contract. RRA doesnt stop the agents doing that eg to annually review the terms and conditions and update these (with agreement of the tenant as they cant force old agreement to end as these are periodic not fixed and dont expire). The fact it’s entirely unnecessary is irrelevant. It was never necessary as you always could have let the fixed tenancies become periodic. So there is no reason they can’t keep charging.
Just like if the 5% covers continuation of your contract with the agents, for whatever advice or other services it specifies, that is perfectly legal.
However you do not have to accept the proposed renewal but there may be exit terms and conditions. Check and read the contract very carefully as the contract may claim to preclude you from renting to the existing tenants found by the agents but i think that may be seen as unfair terms and conditions. There may be an exit fee.
Good luck
They can’t keep charging for something that isn’t being done . It would not be a fair term under CRA 2015.
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wow… they’ve been doing good business from you. I think at that rate you could have paid for LL training through a LL association and would have saved money by managing the properties entirely yourself including finding tenants. 5% per year per property was already money for nothing. Absolutely unnecessary.
If they insist that you still owe them 5% a year, I’d recommend asking them for the contact details of the redress scheme they’re part of and escalating it to them. There’s no way they can charge you this anymore.
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Yes but agents could easily claim it is being done if they continue to review and issue new tenancy agreement signed each year by the tenant.
The fact it’s unnecessary is irrelevant.
@winetapper needs to read their contract look at the exit terms etc
Best
er… it’s entirely relevant. That’s the whole point of the post.
Unnecessary doesnt equal illegal.
Well all the agents providing annual renewals of fixed contracts over many years provided an unnecessary service as all those contracts could have been allowed to become periodic. Those agents did nothing wrong legally even if it was dubious legally (they may claim some tenants and LLs preferred the certainty of a 12m fixed contract and an annual update to make sure the T&C kept up to date).
People selling a service consumers dont need isnt generally illegal unless the seller uses lies tricks or pressure to sell it. We’ve not been told any of those apply in this case.
If the contract with the agents specifically says it is to provide new fixed term contracts with the tenants every 12 months then as such contracts are illegal under RRA the agents shouldnt be producing these in draft or trying to get tenants to sign them (and it would be an offence under RRA with the landlord liable). So then IF agents are no longer providing such contracts they clear cant charge. But the contract with the agents may be much less specific. If they simply refer to 'reviewing and renewing contracts ’ that is still possible under RRA. We simply dont know.
So it depends what contract with agent actually says they do for their 5%, not whether RRA forbids 12m tenancy contracts or whether producing those would be unnecessary and illegal to enforce under RRA
Best
The only person who said it did was…
oh no, wait, no one said it did.
It may be the best you can hope for is when a tenant leaves sever your ties with these agents. Use then an agent for a finders fee only
No people just quoted legislation saying what would imply the agents action was wrong. Breaches of consumer legislation quoted are unlawful
“Yes but agents could easily claim it is being done if they continue to review and issue new tenancy agreement signed each year by the tenant.I’ll have to agree to disagree as would the solicitors who will disagree with what you are saying”
I’ll agree to disagree as would the lawyers who will refute what you are saying . RRA , CRA and contract law will refute this .
Tell the tenant NOT to sign anything the agents send to them
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I think all those lawyers would say to do exactly as i have suggested - look at the contract with the agents and see exactly what it says they are providing. Then compare with what they say is being provided. Only then can they or a court advise whether the agents are claiming to provide something that isnt possible to provide because of RRA or not being provided and then the landlord is protected by contract law (more likely the sale of goods act than consumer rights act i think as the service is being provided to the landlord acting as a sole trader business not as a consumer)
If the agent’s contract is about providing advice and renewals of contracts when needed, rather than specifically saying they provide renewals of fixed term 12m contracts, then they may not be doing anything wrong legally.
RRA doesnt say that a new contract cant be drafted and provided by agents annually and signed by tenants and LLs annually. It just says 12m fixed term contracts arent legal.
Im not saying what the agents are doing is right, certainly not morally. But they are far from the only business where people are encouraged to click ‘renew’ for services they may no longer want or need and it’s not necessarily illegal or unlawful unless threats or pressure or if the service not being provided and we really dont know if any of those apply in this case.
Best
No, you said unnecessary doesn’t equal illegal.
Any claims of illegality here are for charging for something that a) “does not exist” or b) “isn’t being done” not charging for something that is being done that is unnecessary.
And in both cases the posters said that the action would allow challenge on the basis of being “unfair” rather than explicitly “wrong.”
As you pointed out, previously tenancies could go periodic before, and many LLs and agents preferred fixed terms as they imagined this provided more predictability.
But things have changed. Now, by definition, tenancies cannot be renewed.
I think we are getting into pedantics which are for a lawyer
Tenancies cant be renewed. But new tenancy agreements with updated terms can certainly be produced and agreed with tenants. just as before
Unless the contract with the estate agent is so specific that their service ‘renewing’ tenancies can only be interpreted to mean renewal of tenancies in the old sense, such as specifically saying it is for new fixed term 12m tenancies every year, then ‘renewing’ may be perfectly ok as a service they offer.
The OP needs to read contract, see what it says is being supplied, see what agents say will be supplied under renewal, and only then can decide or be advised. It’s unlikely agents will say they are going to be providing new 12m fixed term contracts, if they do obviously thats wrong and can be challenged. If they say they will be reviewing and updating the APT when needed that would be legal (but maybe not vfm for 5%)
Best
C’mon… you 
pedantics 
Great, so when the OP says
Then that needs to stop.
Er… except that existing APTs never need to reviewed or updated.
wholeheartedly agree with that… preferably before signing it.
But as that boat has sailed, it would be great if @winetapper could actually quote the relevant clauses from the contract for us so that we can really get into the weeds.