Any way out of Landlord renewal fees?

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    Any way out of Landlord renewal fees?


    I have been renting a 1 bedroom property in London for the last 14 years which has been pretty successful. For the first number of years I rented it myself (I had one guy in there for 5 years whch was great) but in the last 4-5 years I have been using agents. When using an agent the tenants haven't stayed beyond a year so I haven't faced this issue around renewal fees for me as the landlord.

    So my current tenant (AST started on 3rd April 2019) would like to stay beyond April of this year but the terms and conditions I signed in 2018 for my previous tenancy with them (I don't see anything in the agreement I signed with them about how long the agreement applies for), not the current one, states that renewal fees are 6% + VAT (compared to 7% + VAT for the inital find only fee).

    The relevant terms and conditions I signed are below but it is worth noting that the final page of the agreement refers specifically to the renewal fees, which I guess is to ensure they dont get caught by the OFT and Foxtons hidden clause issue from back in 2010 or so.

    Their terms and conditions seem to close off the option of letting it go periodic as a means to avoid the "renewal fees" although it would be payable monthly in advance.

    For some reason the tenant knows the estate agents (their office is right underneath my building) so any chance of trying to pull a fast one and pretend she isn't there isn't going to fly.

    I know things have changed with respect to the fees tenants can be charged for renewals but is there anything which applies to landlord fees?

    Does anyone have any advice in what to do in this situation? Should I

    a) Continue on a periodic tenancy
    b) Renew myself directly
    c) Renew through the agency but ask for say a 3% increase in rent to offset the renewal fee?
    d) Try and negotiate the 6% + VAT renewal rent with the agency under threat of me getting a new tenant with another agency and agreeing a 0% renewal fee

    Any other suggestions would be greatly appreciated.

    renewal fees.png
    Attached Files

    The images are two small to be able to read more than a small part.

    If option (c) exists, your rents are below market price.


      Thanks for your reply. I will upload the terms again tonight but they seem pretty comprehensive to me.

      Option c is about the only avenue open to me if I renew though the agent. i.e. they should at least do something for their fee and would be able to comment on the fair market rent.

      Obviously I need to not take it above market rate otherwise the tenant may choose to move out but I wonder if 3% is considered generally acceptable compared to inflation. I do understand the benefit of a good tenant though and haven't generally increased tents when I've rented it myself - I prefer to keep a good tenant onside.


        I've uploaded the terms as below.

        Any advise would be greatly appreciated.

        renewal fees.jpg


          If that's what you agreed t, then that's what due even if you deal with the renewal yourself. About ten or so years ago a client of the London firm Foxton (who incidentally charged pretty much the highest fees at the time) refused to pay renewal commission and the case went to Court.

          After the Foxton case which I seem to remember rumbled on for years and went to appeal people (included me) used to try to wriggle out of renewal commission by citing the Foxton case but I don't think that eventual decision allows for that gig will work any more. The order made directed agents to make it clear in their contract what would or would not be due at renewals. and here the agent made it clear that you would be paying these fees if you signed up with this firm and I think you are stuck with them. Your only hope is that the agent goes bust ceases to exist and there is no-one around to demand them of you


            That wasn't the outcome of the Foxton's case.

            The decision was that agents couldn't charge for work that they didn't do.
            What work does the agent do for the fee they're proposing to charge?
            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).


              I think you might be mistaken. The only reason it went against Foxton ab initio was that they didn't make it clear in type size of reasonable size, for example to their client that renewal fees would have to be paid. Nowadays agents spell it out. So the contract between the parties is upheld.


                Originally posted by ATC View Post
                I think you might be mistaken.
                It's possible.
                I've been wrong before.

                There were three types of clause that are unfair unless they are brought to the landlord's attention and they have the opportunity to specifically agree them as they are clearly disadvantageous.


                It needs a lot more than making the terms clear.
                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).



                  i am curious to know how you resolved the issue. Did you get legal advice? I am in the same boat with a London agency looking for £1900 for a renewal which required little or no work on their behalf.


                    I'm afraid I just coughed up the renewal fees. I did howver negotiate a further reduction in renewal fees. I had signed up to 7% + VAT for the first letting and 6% + VAT for renewals to reduce 1% each year.

                    However having spoken with other agents, a 2% step down and for only 1 renewal was common. They obviously knew that as I was pushing against an open door.


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