LA fees when tenancy goes to rolling periodic

[jenniferL]

My tenants are about to move into a rolling periodic tenancy. I will pay the letting agent their commission, but they have invoiced me for 12 months in advance. As the tenancy is now month to month I can not understand on what grounds they can charge me for a 12 month period in advance.

The agreement states that the commission is due based on the same terms in the same manner. My understanding is that the manner is the period of the tenancy, which is now a month at a time.

Please could anyone add any clarity for me please ?

Thanks

[Baldie91]

Nothing like LA's giving the rest of us a bad name..... *sigh*

Anyway it's highly unusual to charge landlords like that. Most charge on a month by month basis.

If your Agency Agreement states that you have a minimum period of 12 months after a new contract starts they could *try* that line, however it depends on specific wording in your contract.

"Same terms and same manner" most likely means the exact same upfront payment period as the original tenancy. If in the first instance you had a 12 AST which charged for 12 months in advance then I doubt simply by moving onto periodic that you would turn automatically to paying the commission on a monthly basis (however bad that is). The only way you could argue out of this is *if* the agency agreement states advance payment of commission equals the length of the tenancy. If it simply states the length of advance payment is the same as the original tenancy, then it will likely be 12 months.

Best thing to do is have a chat to the agent and ask why you were not made aware of this. There may be other nasties in the contract such as fee's for ending your contract with them, or potentially they may even be required to refund your fee's already paid.

If you could post the relevant clause, that would help things.

[jenniferL]

Hi Baldie91

Exact wording below.

All fees are charged at xx% per annum based on the gross rental due for the term of the Tenancy Agreement plus VAT payable IN ADVANCE, ignoring any options to tenninate by the Landlord or Tenant (subject to a minimum fee of £IOOO plus VAT). For any services exceeding xx% as per the table below, the remaining percentage will be deducted from the rent on a monthly basis for the duration of the Tenancy. Subsequent extensions or continuations of the Tenancy to any of the Tenants in the original Tenancy Agreement are charged at the same rate and manner for each year or part of year. irrespective of wtether or not we have prepared new documentation (which may not be required). Fees are not refundable unless we have acted negligently or in breach of this agreement.

Thanks

[Baldie91]

Yeah, sadly by the looks of it they've covered their backs there. Looking at that wording it does seem like a 12 months in advance fee!!!

Personally most LA's I know either charge on a monthly basis or on rent paid. Seems a bit excessive charging fee's on rent that's not even been collected.

[tatemono]

funnily enough, I just looked on an LA's agreement yesterday with exactly the same kind of clause. It also had clauses about reimbursing the fee pro-rata if the tenancy ended early but (and this staggered me) NOT if the LL issued notice to end the tenancy.

I told them I wouldn't sign it as was and that if they wanted my business, they'd deduct their fee when the rent was paid each month and allow me my right to issue a notice whenever I was legally and morally entitled to do so.

Glad I wasn't born yesterday... and that I have them over a barrel (long-story) so they'll have no choice but to agree.

[Guby]

You should read: Competition & Market Authority guidance for Lettings Professionals on Consumer Protection Law/ chapter Renewal Commission and Sale Commission: Article 4.23: "CMA considers the following terms, in particular, are likely to be found to be unfair....In addition, terms which require a landlord to pay ‘renewal commission’ to an agent: in circumstances where there is no further work after the introduction of the tenant, or where the landlord may decide not to continue instructing the agent in relation to any work, or.."

In general this Guidance is providing the Landlords (as a consumer) a certain degree of protection. Landlord should use this guidance and prove to the Agents what they have done wrong or that they used abusive clauses. If the Agent do not rectify and comply with the Guidance, LL should take legal procedure: complain to the Agent first then to the Property Ombudsmen if the Agent is registered with. Further LL can take the case through the courts.

[Baldie91]

Guby,

That sounds suspiciously like it's in regards to find only fee's. If they're managing the property I'm pretty sure they can charge in advance for a fixed period.

[Guby]

Hi Baldie91

I believe that maintenance fee/ charge should not be mixed with other services like renewal or find only TTs.

With regards to Renewal the attitude of the Estate Agents is that they would like to charge the Perpetual Renewal Fee (PRF) indefinitely, and most of them have clauses incorporated in their TOB/ TCs. More that that {Mod - name removed} has a clause stipulating that even if the LL sell the property they are liable to pay the PRF if the new owner/ LL does not take over the obligations (TOB/ TCs).

The only LL defense is the CMA Guidance as presented above.

The relationship between the Agents and LL is a business to consumer one, where the LL is the consumer and this is why the Consumer Protection Act come in force and the Gov issue the CMA Guidance in order to regulate the Agents.

Now, where most of the big Agents prefer to ignore the guidance is probably because: it is quite difficult for a LL to take legal action against a rich Agent as the legal costs could be huge; but this is an other discussion about reasonable access to Justice in UK.

I believe that JenniferL should have the legal right to cancel the Agent services as they are not longer required for a periodic rolling contract, without paying the PRF.

Hi JenniferL, my advice is that: next time ask the Agents for a NO Renewal Fee obligation. I can tell you that there are many agents who will accept this.

All the best

[jpkeates]

The relationship of an agent to a landlord can be a trader/consumer relationship.
It depends on the landlord; your average accidental landlord with one property is probably transacting as a consumer, a landlord with several properties and some experience may not be.

[Guby]

When 1 LL has several or more properties with 1 Agency alone then yes, it could be a business to business relationship. But if 1 LL has few properties with 1 Agent alone then NO, there is a business to consumer relationship.

Of course Agents will try to argue that the relationship is a Business to Business one, as they are trying hard to pass FULL liability to LLs all the times.

In fact, it will be nice to be considered Business all the time so Taxation will be lower (like corporation Tax) but it is not the case as Rental taxation is going as high as PAYE. Once HMRC is taxing the private/ domestic Rental sector as PAYE (where PAYE is not business) then Rental is NOT Business.

[pebblepebble]

Mine only charge fees month by month, including during the AST