I’m seeking advice regarding an issue I’m facing with my current letting agent, and I’d appreciate any insights or experiences you might have.
Background:
I own a property that’s currently managed by a traditional letting agent under a full management agreement.
The agreement includes a clause stating:
“I/we agree to pay fees to [Agent’s Name] at the agreed rate whilst tenants introduced by them are occupying the property and paying rent.”
I wish to terminate the contract with my current agent and move to managing the property through OpenRent.
I intend to keep the current tenants, as they are reliable and have a good tenancy record.
The Issue:
Upon notifying my current agent of my intention to terminate the agreement (providing the required three months’ notice), they informed me that I am obligated to continue paying their management fees as long as the tenants they introduced remain in the property.
This means I would be paying ongoing fees indefinitely, even though they would no longer be providing any services.
My Concerns:
1. Unfairness of the Clause:
It seems unreasonable to pay fees without receiving corresponding services.
The clause may create a significant imbalance in the parties’ rights and obligations.
2. Legal Considerations:
Consumer Rights Act 2015: Contracts must be fair and transparent. Terms causing a significant imbalance may be deemed unfair.
Unfair Contract Terms Act 1977: Clauses imposing unfair obligations or excluding liability may be considered void if unreasonable.
Regulatory Guidance:
The Property Ombudsman (TPO) Codes of Practice may prohibit such unfair terms.
The Advertising Standards Authority (ASA) mandates that terms and conditions must not mislead consumers.
3. Impact on Tenants:
This clause effectively forces me to consider replacing the current tenants to avoid ongoing fees.
I believe it’s unfair to the tenants, who may face unnecessary disruption, simply because of this contractual obligation.
I want to maintain a good relationship with the tenants and ensure their tenancy continues smoothly.
4. Desire to Move to OpenRent:
I prefer to manage the property through OpenRent to have more control and reduce costs.
Transitioning to OpenRent would allow me to manage the tenancy more efficiently and directly.
Actions Taken:
I have drafted a formal letter to the agent, outlining my concerns and requesting an amicable resolution.
I proposed adhering to the three-month notice period and requested that we mutually agree to waive the clause requiring ongoing fees after termination.
I emphasized my desire to resolve the matter fairly without resorting to legal action.
My Questions:
Has anyone faced a similar situation with a letting agent?
Is such a clause enforceable, or could it be challenged as an unfair contract term?
What steps would you recommend I take to address this issue?
Would it be advisable to seek legal advice or involve regulatory bodies like the Property Ombudsman?
Are there any strategies to transition to OpenRent while keeping the current tenants without breaching the contract?
Any advice or shared experiences would be greatly appreciated.
Landlords face this all the time as its a standard agency contract clause. To my knowledge no-one has successfully challenged it. Most agents include an option to pay a lump sum alternative. You could enquire about that. You could also enquire with whichever redress scheme theyre registered with what their view would be, but I wouldnt hold out too much hope.
Thank you both for your insights; I appreciate your taking the time to respond.
I realize I should have mentioned that our contract includes a three-month notice period, which I’m fully prepared to honor. My main concern revolves around the clause that obligates me to continue paying management fees even after the contract ends, as long as the tenants the agent introduced remain in the property.
I understand that such clauses are common in agency agreements, but I’m struggling with the fairness of this situation. It seems imbalanced that the agent can terminate the contract without ongoing obligations, while I, as the landlord, am bound to continue paying fees indefinitely without receiving services in return.
I’m curious whether courts would consider this imbalance if it came to a legal challenge. Has anyone heard of cases where such clauses were deemed unenforceable due to being unfair or creating a significant imbalance in the parties’ rights and obligations?
Moreover, I find it particularly unfair that this situation might incentivize me to consider evicting good tenants just to avoid these ongoing fees. I have reliable tenants whom I don’t want to disrupt, and it feels wrong that the contract’s terms might push me toward making a decision that’s not in their best interest.
Clauses in perpetuity are deemed unfair under the CTA 2015
OFT vs Foxtons is case in point
Challenge it and see what happens
Start with the OFT and ombudsman and also tenant advocacy groups
The law favours the tenant . If you are paying an unnecessary cost then obviously it’s passed on to the tenant through rent so see what Shelter or another similar body have to say
You may want to raise it in the press
I wrote to a journalist at the Guardian regarding the invisible 15% rule that estate agents workmen have to add on for every job done for the estate agent so the estate agent can make more money ( in addition to the maintenance charge )
I had a similar issue with the estate agent, for your own information this was at the end of the contract. The tenants liked the place and told the estate agent who assured them that they could stay if they wished. This was after a 2 months’ notice, was given to the tenants.
Estate agent came back to me that l need you pay them a monthly rent plus 20% VAT and renewal fees to keep the tenants. Obviously, tenants didn’t prepare themselves to go, so l ended up giving them more time to find elsewhere to live to avoid these complexicity of agent fees. Now, I have taken back the property from the estate agent!!
The house was left in a mess and the estate agent are not in a hurry to arrange cleaning
Tenants redecorated the house without permission leaving paint work affected, marks on the wall which was painted just before tenants moved in and the agent had done nothing about it!!
I wanted to update you all on the situation I posted about earlier regarding my letting agent’s clause that required me to continue paying management fees even after terminating the contract, as long as the tenants they introduced remained in the property.
Good news: I’ve managed to reach an amicable agreement with my agent!
After sending them a formal notice of termination and expressing my concerns about the fairness of the clause, they agreed to accept the three-month notice period with no further fees or obligations beyond that, even if the current tenants remain in the property.
Summary of How It Happened:
Formal Notice Sent: I sent a detailed email to the agent, formally notifying them of my intention to terminate the management agreement as per the contract’s notice period. I highlighted my concerns about the clause requiring ongoing fees without corresponding services, which I believed to be fundamentally unfair.
Key Points in My Email:
Consumer Rights Act 2015: I referenced the Act, noting that contract terms must be fair and transparent, and that a term may be considered unfair if it creates a significant imbalance in the parties’ rights and obligations to the detriment of the consumer.
Unfair Contract Terms Act 1977: I mentioned that clauses imposing unfair obligations or excluding liability may be considered void if unreasonable.
Regulatory Guidance: I pointed out that industry standards and codes of practice, such as those from The Property Ombudsman and the Advertising Standards Authority, require terms to be fair and not misleading.
Personal Circumstances: I explained that continuing to pay fees without receiving services imposed an undue financial strain on me due to personal circumstances.
Commitment to Tenants: I emphasized that I had no intention of disrupting the current tenancy and was committed to ensuring the tenants’ comfort and stability.
Agent’s Response: They replied, agreeing to accept the three-month notice and confirmed that there would be no further fees after the termination date, even if the current tenants remained in the property.
Key Takeaways:
Challenging Unfair Clauses Can Work: By professionally addressing the unfairness of the clause and backing it up with relevant laws and industry standards, I was able to negotiate a fair outcome.
Effective Communication Is Essential: Keeping the dialogue respectful and focused on finding an amicable solution helped facilitate a positive response from the agent.
Tenant Well-being Matters: Highlighting my commitment to the tenants’ well-being may have contributed to the agent’s willingness to cooperate.
Thank You for Your Support!
I appreciate all the advice and experiences shared here. Your input gave me the confidence to address the issue directly, and I’m grateful for this community’s support.
If anyone has questions or would like more details on how I approached the situation, feel free to ask!