Absurd agency fees charged to landlord following early tenant departure

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    Absurd agency fees charged to landlord following early tenant departure

    Hi everyone,

    I'm a landlord having issues with a letting agent- would really appreciate any advice on my situation:

    The letting agent arranged a 2 year contract with a break clause at 12 months (2 mpnths notice needed). So the minimum tenancy term would be 14 months. I accepted the offer and signed the agreements, but changed some of the terms of the agreement given i) I originally wanted a 1 year contract and ii) some of the agent's clauses were, in my opinion, pretty ridiculous. The relevant amended term was one which required me to re-letting with the same agent if teh tenant chose to exercise the break clause. If I chose not to, I would not get a refund on the 2 years worth of agency fees that I would have already paid by that point (giventhis agent's letting fees are heavily front-loaded)

    At the inception of the contract, I received a signed agreement by the agent that if the break clause would be exercised by either party, I would get a refund of any agency fees such that the max I would need to pay would be 14 months worth (ie the minimum tenor of the tenancy).

    The tenant moved in but needed to move out a few months later, several months earlier than the break clause stipulated. The tenant had his reasons and in the end I was fine with this and negotiated an early termination cost with him. I asked the agent to confirm that in this instance I would get a refund on any agency fees above 14-months worth. Their original response was negative, until I repeatedly quoted our negotiated tenancy agreement clauses. They then responded saying they would honour the break clause refund agreement.

    The agent ended up taking 2 years worth of agency fees instead of 14 months, saying that because thisi was a "mutual surrender', the full 2 years worth of fees would be payable. When I cited their previous agreement about the refund that would have been paid back to me if the tenant had stayed until the break clause, they responded saying that this was not a break clause situation since both sides had agreed early termination outside the termsof teh contract.

    So I'm in a situation where I have paid 2 years worth of agency fees for a tenant that moved out of 5 months, although if the tenant had moved out after exercising his break clause (ie after 14 months)...I would have paid less agency fees.

    The agent is question is well known for taking the mick and I'm willing to pursue this as far as I need to to get a refund...but would appreciate any advice you may have.

    Thanks a lot.

    #2
    How much are we talking about? If it's less than a grand, I wouldn't bother pursuing it.

    Would they refund you if you re-let with them?
    To save them chiming in, JPKeates, Theartfullodger, Boletus, Mindthegap, Macromia, Holy Cow & Ted.E.Bear think the opposite of me on almost every subject.

    Comment


      #3
      I think paragraphs 4 and/or 5 of Schedule 2 of the Consumer Rights Act 2015 should apply.

      Comment


        #4
        While I'd pursue the unfair term argument, I suspect that, because the term was specifically negotiated, it may fail.
        The original clause was (almost certainly) unfair, and the landlord negotiated an alternative (slightly fairer) version.

        The agent agreed to the new term, and could argue that part of the new risk agreed was exactly what happened.
        If the tenant executed the break clause, the agent would lose out - if the tenant left early for other reasons, the landlord would lose out.

        And the landlord should have considered the cost to them in making the decision to allow the tenant to leave early (a decision the agent wasn't part of).
        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
          Unless I have missed it, the requirement that for a term to be unfair it must not have been individually negotiated no longer applies as such. Instead we have the following provisions of the Consumer Rights Act 2015:

          · A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.

          · Whether a term is fair is to be determined—

          (a) taking into account the nature of the subject matter of the contract, and

          (b) by reference to all the circumstances existing when the term was agreed and to all of the other terms of the contract or of any other contract on which it depends.

          Comment


            #6
            I don't have any argument to counter that in a definitive way.

            The new agreement doesn't seem to be "a significant imbalance in the parties rights and obligations", it just looks like a commercial deal about how the agent is paid for finding a tenant.
            The specifics were negotiated and both sides were comfortable with the result.
            The only issue with the agreement is that the landlord didn't consider the position of the agent when they agreed to the early surrender - the terms of the agreement weren't met (exactly as the agent has claimed).

            While it looks pretty short sighted of the agent, in that they claiming an "extra" 10 month's fees now, while a repeat arrangement with the landlord would bring them a minimum of another 14 month's fees, it's hard for me to see where the agent is acting unfairly.
            Neither party considered the effects of an early surrender (understandably, as it's not common) and the agreement simply doesn't reflect that possibility.
            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


              #7
              In all dealings between agents and landlords the first step is to determine whether the landlord is in fact a consumer.

              Under the Consumer Rights Act 2015 a consumer is "an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession."
              So, in my opinion, a BTL landlord is not a consumer. A so-called 'accidental landlord' may probably be a consumer, though.

              Comment


                #8
                All,

                Thanks for your comments- particularly the focus on the Consumer Rights Act.

                I'll keep you posted on the result.

                Comment


                  #9
                  the agents are bigger rogues than almost ever are landlords!

                  Comment

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