Tenant moved out after 6 months, letting agent says I owe them fees

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    Tenant moved out after 6 months, letting agent says I owe them fees

    Hi all, I am new to this site, and have a question regarding letting agents. I would really value your input as I feel that I am being extorted by the very people I employed to help me! As stated in the topic, I have signed up to a 12 month management contract with an agent but the tenant moved out after just 6 months (their minimum term). The agent has invoiced me for north of £800 stating that I owe them 6 months of management fees. The clauses they have referenced from their contract are as follows (word for word).

    A6: full management services 10.8% (9% +VAT) of the gross rent for a minimum period of 12 months starting from the start date of the agreed tenancy term payable monthly from the rental collected. Property offered to let at £ PCM. (They didn't fill the value in!) <Agent> also levies a £14.40 (£12 + VAT) per month service fee. An initial tenant find fee in line with the company's scale of fees and charges, as amended from time to time is charged, currently £200 + VAT when a new tenant is found on letting or reletting a property.

    G1: termination of full management services
    G1.1 the agent reserves the right at any time to give 2 months notice from the next rental due date in writing to the landlord to terminate this agreement stating the reason for doing so.

    G1.2 the landlord must give in writing a minimum of 2 months notice from the next rent due date to terminate this agreement. The minimum period of this agreement set out in A6 must also have been achieved. If this is not the case a fee plus VAT equal to the unexpired portion of the term in A6 will be levied.


    When I write it out like that it does seem quite stacked against me. But I do think there are reasons to challenge it and I would like your opinions in the matter. Firstly, I would like to state that I am not just a slum landlord who doesn't want to pay put, I just find it drastically unfair that these people are trying to charge me 800 quid for not doing anything. I am selling the house too, there are very good reasons for this. Anyhow, my rational behind my challenge are as follows:

    - It it took the agent 6 months to find a tenant in the first place - I am sure I don't need to explain the financial loss of this to you guys!
    - The agent told me the tenant would stay for at least 2 years, they have only stayed for 6 months
    - The agent should be acting in my bests interest, I have employed them to help me not obstruct me.
    - The agents interpretation of the contract passes all risk onto the landlord, even their fees are passed onto me. I would argue that this is a completely unbalanced contract.
    - They are charging for work that they haven't even done.

    How do you think TPO would view a contract stacked against the landlord like this?

    Mt my interpretation is that the contract is to protect the agent from landlords removing them early, when there is a tenant in place. It doesn't entitle them to turn the landlord into a bank for a guaranteed income.

    Technical holes in the contract
    - I have not actually terminated the contract, I have not instructed anything to change. I would tell them to continue to collect their fees from the monthly rent (even though there is none for another 6 months, effectively the tenant has ended the contract)
    - there is no clause that states that I must re-let via the agent if the term is not fulfilled (that would cost me thousands of pounds in rent deficit anyway!)
    - there is no specific clause that states what happens if the tenant leaves before the 12 months is up. (I believe that is because it's not really legal to draw up such a 1 sided contract)

    Further technical holes (I don't actually want to use these but worth noting)
    - the agreed rent is not actually filled in on the signed contract
    - my address is not correct on the signed contract


    I will try to make my point that they are extorting me and trying to get money for not doing anything to the agent to see if he backs down amicably because contracts get messy very quickly but I don't think these people will do that. I will also offer to meet them some of the way to their fee.

    If if we can't find an agreement what's the next step? Do I complain to the property ombudsman? Any thoughts on how they would handle this?

    Thanks very much in advance for you help everyone.
    regards, Darrol.




    #2
    Well it is the contract you signed......

    If you find another tenant and they manage it within that one year it would be unreasonable to charge you twice though for their "services"

    Comment


      #3
      I don't see that you have much of a challenge.

      You agreed with clause A6 that you would pay them for their management services for a minimum period of 12 months from when any tenancy started.

      G1.2 says that you can give them notice to terminate that agreement of 2 clear rental months, but such notice can only be dated to end after the 12 months set out in A6.

      The only possible argument I can see there is the wording of A6:

      "full management services 10.8% (9% +VAT) of the gross rent for a minimum period of 12 months starting from the start date of the agreed tenancy term payable monthly from the rental collected."

      If the propertery is vacant then 10.8% of Zero rent is Zero, and there is no rent being collected to pay anything from anyway.

      They will argue that clause means the gross rent as calculated for a minimum period of 12 months.
      You can argue that it doesn't say 'calculated' anywhere and so it should be the actual gross rent achieved over the 12 months.

      I don't exect them to budge though, and just how any tribunal/court would look at the respective merits of those arguments will probably depend on the judge on the day.

      The other fees you have agreed to in the contract and I don't see anything you can argue against those.

      TBH with that contract in place you should not have agreed to a 6 month fixed term, it should have been 12 months fixed term so that the tenant would still be liable to pay rent if they left before the 12 months.

      PS. Agencies are set up and run to make money for the agency, not to act in your 'best interests'.

      Comment


        #4
        Originally posted by nukecad View Post
        PS. Agencies are set up and run to make money for the agency, not to act in your 'best interests'.
        This is true, but there is a special area of law relating to agents and agency, which works against the agent in this case.

        They have a duty to the landlord as their principle not to put their own interests first - and, in negotiating a 6 month agreement with the tenant against a 12 month agreement with themselves, they have done exactly that.

        I would refer them to the Foxtons case relating to agents not being allowed to charge for services not delivered.
        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


          #5
          Whose idea was the 6 month tenancy? If you suggested it, that might alter things.

          Comment


            #6
            Thanks all,

            to to ansewer your question DPT57, the 6 months minimum term was theirs, I didn't change that part of the contract.

            My argument is that I have not terminated the agreement and I still do not wish to terminate it. The tenant has moved out but I do not wish to change anything. It is not me who has terminated the contract.

            Since there is a 6 month minimum occupancy and a 12 month management term, there should be a clause that specifically deals with when the tenant moves out early. There is none. So either it's unfair, or it's a trap. Both of which are one sided.

            the basis if my argument is as jpkeats says - the contact is one sided written in their favour with the risk of both loss of rent, and their fees pushed onto the landlord and they are trying to charge for services they won't be delivering.

            the agent is saying that they offer reduced tenant find rates if they provide a managed contract as they recoup the reduction over the course of the 12 month term. I think that is fair, they are now out of pocket for half of that recoup time so I will offer to pay them this difference. I am not happy to pay them for work they won't be doing because of some non-specific terms in a contract.


            Do I actually have anything to lose by dragging through the Property ombudsman? Is it a something for nothing challenge? How long does that process usually take?

            cheers

            Comment


              #7
              The agents were absolute fools to sign up a tenant on a 6 month fixed term when the agreement they have with you is for 12 months. Seems to me they were negligent in the process by doing so.

              I would also ask the question why they didn't advise you that if you wanted a long term tenant then the tenant needs to be signed up for a longer tenancy.

              I agree with jpkeates they have not represented your interests particularly well, and the argument he suggests re Foxtons case may be enough to see them off.

              If they accept your proposed settlement offer fine, if not then you have nothing to lose by going to the property ombudsman, the same cannot be said of the agents though, because if it's a similar setup to the FSO, the agent will have to pay a fee. 😁

              Comment


                #8
                You could also have a look at the Codes of Practice for Residencial Letting Agencies which is available on the TPO website members area. This is what TPO uses as a guide when adjudicating to assess fairness, and breaches of the code usually result in a positive outcome for the complainant.

                Comment


                  #9
                  Thanks for your help guys. I've decided I can be bothered to battle these d!ck heads. Thankfully I've sold the place and will buy something s bit nearer to me so I can manage it myself.

                  Comment


                    #10
                    Originally posted by Darrol View Post
                    I've decided I can be bothered to battle these d!ck heads.
                    Assume you mean you can't be bothered.

                    Unfortunately that's how they, and others like them, get away with it.

                    If they don't get challenged by those they are ripping off, and reported to the regulator/ombudsman, then they'll just keep doing it and keep getting away with it.

                    Comment


                      #11
                      "full management services 10.8% (9% +VAT) of the gross rent"

                      If there is no rent there is no fee.

                      Comment


                        #12
                        What period does the invoice cover?
                        And have you paid the agent anything so far?

                        From what you've posted, I would say that you will owe them £240 for finding a tenant, £14.40 per month regardless of whether or not there is a tenant in the property, and 10.8% of any rental income you received during this period.

                        Assuming that the invoice includes VAT, £800 might actually be what you agreed to if the invoice includes the finding fee and the six months the tenant was in the property (and, if the rent was £1100 PCM, it would be about right even if it didn't include the finding fee).

                        Fees for the period with no tenant should only be £14.40 per month (although perhaps even that isn't legally enforceable).

                        Comment

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