UK Landlord Forum / Life

I was wondering if the Landlord community could help me out!?

I used an Estate Agent to advertise my property for tenancy last year and all went through smoothly. I paid the Estate Agent 8% to prepare the Tenancy Agreement and find the tenants.

1 year later, I would like to prepare my own Tenancy Agreement i.e. copy the previous agreement and remove mentions of the previous Estate Agent and update the dates. Therefore I dont see the need to pay 8% to update the existing agreement.

When I emailed the Estate Agent to try and cut them loose they said:

"Unfortunately it does not quite work like that as you are under contract with ourselves for all extension and renewals for the person we supply as a Tenant."

In my contract it mentions "XY will have sole rights to manage properties for the period of the Tenancy granted by the Landlord or any extension of it subject to the Landlord's agreement."

I collect rent from tenants each month, sort out any of the repairs if needed so in effect I manage the property and the Estate Agent holds the deposit in the Deposit Protection Scheme (DPS) which I feel I could put in a DPS myself.

The 8% cost from the Estate Agent I would have to recoup through rental increase from the Tenant for the coming year but considering both myself and the tenant wouldn't gain anything from this it would make logical sense to cut the Estate Agent free. Do you know any way that I would be able to break this agreement but still keep the same tenants?

Apologies if this question has been asked / answered already, I did browse through a number of threads but couldn't find a problem relating to mine.

When you say you paid 8%, do you mean you paid 8% of a whole year's rent upfront to agents? Are you sure you just signed up for tenant-find? It's common enough to find a clause like that in a management contract, especially if the agent doesn't charge separately for finding a tenant in the first place, but it's odd for tenant-find only. Then again, it's odd (and awkward) that the agent has protected the deposit on your behalf. What services does the contract say they will provide for you on an ongoing basis?

If they're insisting on charging you another 8% of a year's rent, just to renew the tenancy agreement then ... don't renew then tenancy agreement. In the absence of a formal agreement, the tenancy becomes a statutory periodic tenancy and continues until either you tenant gives you one month's notice or you give him two.

No the 8% was taken out of the first month's rent which was paid through the Estate Agent. I only wanted the tenant-find but they only seemed to offer 8%, 10% & 12% property management options. In the Letter of Communication from the Estate Agents it says that they will:

1.1 W e w i l l :
1.1.1 visit the Property;
1.1.2 advise you as to the rent at which we believe the Property should be marketed;
1.1.3 provide any recommendations we may have as to how best to present the Property together with information regarding
relevant legislation.

1.2 Marketing the Property
W e w i l l:
1.2.1 prepare particulars,
1.2.2 provide details of the Property to suitable applicants and relocation agents;
1.2.3 advertise the Property on our website and on other property portals;
1.2.4 provide details to other agents on a commission sharing basis (where applicable) unless you instruct us not to do so (note
that where we do provide details to other agents on a commission sharing basis, this does not change the amount of commission
payable by you – i.e. we pay the other agents' commission, not you);
1.2.5 erect a "To Let" and "Let" board, where allowed;
1.2.6 arrange for prospective tenants to view the Property accompanied either by us or our sub agents or relocation agents;
1.2.7 provide you with regular feedback and inform you of all offers.

1.3 Arranging the Tenancy
W e w i l l :
1.3.1 prepare a tenancy agreement (note that whilst we will, if instructed by you, use a form of agreement specified by you or the
tenant we cannot advise on the suitability of any tenancy agreement which has not been prepared by us. Accordingly, we would
recommend that you take appropriate legal advice before using any form of tenancy agreement);
1.3.2 apply for references either ourselves or via a Credit Reference Agency;
1.3.3 collect and, if advised by you, hold any deposit payable by the tenant:

1. OUR LETTING, MANAGEMENT AND RENT COLLECTION SERVICE
a. in the case of an assured shorthold tenancy, under the terms of the tenancy deposit protection scheme (see clause
7 below); and
b. in any other case, in accordance with the provisions of the relevant tenancy agreement;
1.3.4 unless you instruct us not to do so, arrange for an inventory to be prepared and checked at the beginning of the tenancy by
an independent inventory clerk the charge for this will be deducted from the first month's rent received and will include an
administration charge as per Clause 6 below. While we take great care in choosing and overseeing inventory clerks, the contract in
relation to the inventory clerk's service is between you and the inventory clerk and we cannot accept responsibility for any loss or
damage caused by the neglect or default of any inventory clerk. You should be aware that where a holding deposit has been
accepted from a prospective tenant and you decline to rent the property to that person (except where they have failed
referencing), the deposit will be refunded in full and you will be liable for our fees and costs incurred in pursuing the references
(see clause 6.0 of the agreement). Where a prospective tenant fails referencing, the deposit is normally paid to you minus the
costs of referencing and marketing.

1.4 While the Property is let
W e w i l l :
1.4.1 receive rent, submit Statements of Accounts, and remit the rent to you in such a manner and at such intervals as agreed (less
(1) our fees (2) such sums as we pay out with your authority, and (3) if you are not resident in the UK, such sums as we are obliged
to deduct and pay to HM Revenue & Customs);
1.4.2 attempt to contact the tenant in writing and by telephone in the event of any instalment of rent being in arrears for more
than 7 days. If we are unable to secure payment of rent arrears within 7 days of our first attempt at contact with the tenant, we
will report the position to you. We will continue to attempt to secure payment from the tenant by letter and telephone but if the
rent is more than 28 days in arrears we will again report to you and it will then be your responsibility to instruct your solicitors or
take such other action as you consider appropriate;
1.4.3 if requested, submit copies of Statements of account to your accountant or third party;
1.4.4 approximately 2 months before the tenancy is due to expire, contact you and the tenant to ascertain whether you and they
wish the tenancy to be extended;
1.4.5 if appropriate;
(a) prepare documentation relating to the renewal or extension and obtain signatures from both parties;
(b) once the tenancy has been renewed or extended, continue to receive rent as above;
(c) whether notices are to be served such as a section 21 of the Housing Act 1988 requiring possession of the property this will be
under the supervision of a solicitor at a charge of their fee.

1.5 At the end of the Tenancy
W e w i l l :
1.5.1 arrange for the inventory to be checked by independent inventory clerk on the same terms as those set out in clause 1.3.4
above (except that in most cases the tenant pays the inventory clerks charges at the end of the tenancy);
1.5.2 forward a copy of the check-out report to both parties;
1.5.3 allocate the deposit monies once we receive written confirmation from both parties that an agreement has been reached
over what deductions are to be made.
Where we do not manage the Property:
(a) you must tell us or the tenant within 15 working days of the end of the tenancy whether or not you propose to make any
deductions from the Deposit; and
(b) you will be responsible for negotiating directly with the tenant and reaching an agreement in relation to the return of the
Deposit.

The Estate Agents have gotten back to me today to say they might be able to offer me a reduction but that this fee cannot be waived completely. As I am looking to rent out my house for the foreseeable future I dont want to pay any money for a service that I dont want or need.

I'm not a big fan of keeping the periodic tenancy agreement option as I live and work for large amounts of time outside the country and 1 month wouldnt give me much time to organise things if they gave me notice and would prefer a 1 year agreement which the tenant seems happy with also. If I were to fall out with my Estate Agent and let the current Tenancy Agreement run out would I be able to ask the current tenants to stay afterwards and write up a formal agreement with them and just continue with them that way? It doesnt seem right that the tenants should be tied to the Estate Agency in the sense that if I refuse to pay the Estate Agents their fee each year then I cannot keep the tenants that they have found for me.

Thanks for your advice its greatly appreciated and I apologise for any ranting!!

All you need to do is to read the Terms of Business you signed with the Agent... your Agent. I am not a fan of Agents, myself, and I have done just Tenant Find in the past - but this has always been clear that it's Tenant Find only, no other linkage exists. If you have signed your name onto documentation that says the Tenant is really their Tenant and that you are liable to pay those fees for as long as their Tenant resides in your property, then it's a form of caveat emptor. It might seem unfair, but you signed your name against it.

Now... many people would take the reduction offered, however modest, and run with it. Sometimes you can't have it all. And there is a level of honour and morals in sticking to your word (to the document you signed your name against). If you want a clean break - turf the current Tenants out and get new - different - ones, start from scratch without Agent involvement. Your earlier text - "The 8% cost from the Estate Agent I would have to recoup through rental increase from the Tenant for the coming year..." is somewhat misguided - why on earth should the Tenant be penalised for a decision that you have made, and made with your eyes open? You aren't recouping anything. You are paying a professional fee (which is also tax deductible) for a service you engaged someone for (the Agent is not someone the Tenant employed, is it?).

The kind of tie-in you are considering here is not uncommon at all. If you have had an offer of a reduction I would take it this year, then work a little more next year etc.. By then the headache may have gone away as the Tenants may have moved on (especially if you're even considering hitting them with anything like an 8% rent increase).