Letting agency fees - tenancy to continue periodic

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    Letting agency fees - tenancy to continue periodic

    We are accidental landlords coming to the end of our 12 month tenancy agreement in 2.5 months. We are very happy with our tenant and happy with the rent we receive. My question is regarding whether letting agencies can/normally do/try to charge further commission if the tenancy continues on a periodic i.e. month-to-month basis.

    Our letting agency found the tenant initially, collects their rent and disburses it to our account, and is a stakeholder for the Tenancy Deposit Scheme - but does little else now. They do not manage the property. They charged 10% of the first 12 months rent for this, which is fine.

    We would like to keep our tenant and would be happy to just let the tenancy run month-to-month i.e. as a periodic tenancy with the same rent and terms. My previous understanding was that the "Renewal Commission" of 9% (!) is only payable if the tenancy is renewed i.e. a new tenancy agreement for a new term.

    However, looking at the T&Cs for the letting agents which we signed, it says "In the event that the existing Tenant renews, extends, holds over and/or enters into a new agreement (“Renewed Term”) for which rental income is received, commission becomes payable to (the agent). Renewal Commission will be charged as a percentage of the total rental value of the Renewed Term, or where a Tenant extends and/or holds over indefinitely, commission will be payable quarterly"

    To be honest when we first signed this agreement last year we never expected to still be renting the place out, so I did scanned over the word "holding over" - does this mean that they will be collecting 9% even if the tenancy just continues periodic? And is this normal/reasonable practice?

    #2
    Not sure what any judge would decide on that clause where they think they are entitled to all that money for doing nothing.

    You have the option of instructing tenant (in writing, keep copy) that as of now all rents etc should be sent to you, giving bank details etc.. Then agent should end up with £0. Then (after money coming direct to you) you also instruct tenant and agent no renewal. Then wait & see if agent sues for his % commission.

    Hope you have copies of ALL paperwork (inventory, photos..) and get deposit off agent. If agent argues simply instruct agent to return deposit to tenant.
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

    Comment


      #3
      The tenant isn't strictly speaking hold{ing) over - that means they're there when the tenancy has ended, and a new periodic tenancy is automatically created.
      The tenancy is probably being renewed (although it's actually being replaced by a new one, you can't "renew" a tenancy, it ends).
      You can't, strictly speaking, extend a tenancy either, but it's fairly clear what the intention is - the agent has used every word they can think of (other than replaced).

      I'd look and see how you can cancel the agreement first.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        What would suit both us and the tenant, with our circumstances, would be for the tenant to just stay put and for a new periodic tenancy to be automatically created.

        Comment


          #5
          That will happen automatically if the tenant stays put.
          Neither of you have to do anything.

          But the agency fees will (I think) still be due.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            If they don't do any work, it'll be hard for them to justify charging a fee. However... they'll probably argue the 9% is not a fee for originally finding the tenant, but continuing commission for the rent collection etc. service. Which is high, but probably justifiable legally.

            As to the actual wording of the contract... you may try what the others above suggest.
            I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

            Comment


              #7
              You signed a contract, it’s not the agent’s fault you didn’t read it or didn’t think that the circumstances would end up applying to you.

              However, if the agent is no longer providing any service, then they will find it very difficult to justify continuing to charge a fee ad infinitum (it’s a different story if they are going to continue to process the rent).

              There should be some mechanism in the agency agreement to end it, if it’s silent then it’s going to what a judge would consider reasonable.

              Comment


                #8
                If you no longer require the services of the agent then usually you have to give them notice.
                But you’re right in assuming that they will want to renew the tenancy to get their % cut + % of the monthly rent to merely transfer the money to you.

                They’re all crooks. I’ve never met a good agent worth their money.

                Comment


                  #9
                  Originally posted by RedHitman View Post
                  They’re all crooks. I’ve never met a good agent worth their money.
                  You are the only constant in 100% of your failed relationships.

                  Comment


                    #10
                    I've met and do business with honest agents.
                    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                    Comment


                      #11
                      Originally posted by HantsAgent View Post

                      You are the only constant in 100% of your failed relationships.
                      That’s a fantastic quote!
                      Not true in my case; but still very good!

                      Comment


                        #12
                        Originally posted by theartfullodger View Post
                        I've met and do business with honest agents.
                        Must be something in the water then where my properties are.

                        Comment


                          #13
                          There are many agents I would not do business with: Ditto tenants: Ditto landlords: Ditto MPs.

                          There are decent agent, sadly too few.
                          I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                          Comment


                            #14
                            Originally posted by theartfullodger View Post
                            There are decent agent, sadly too few.
                            Unfortunately, this is accurate.

                            Comment


                              #15
                              Originally posted by RedHitman View Post
                              They’re all crooks. I’ve never met a good agent worth their money.
                              You appear to believe that you have the right to insult a number of our forum members, you absolutely don't;

                              https://www.landlordzone.co.uk/forum-rules

                              18. Avoid generalisations (stereotyping) of particular groups of people relating to their gender, race, religion, sexual orientation, occupations or roles such as landlords, agents, tenants, where they were born or where they live, to name but a few. This can cause offence and may be illegal.

                              I also post as Mars_Mug when not moderating

                              Comment

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