an estate agent is charging 'pull out' fee

[newlandlord2016oct]

hello everyone, a quick message to share with you my experience. I've been with this local letting agent for few years. Two recent tenants exited the 12 months contract early, including the latest one existing 3 months before the original contract expire date. It was agreed that the agent letting fee(paid for 12 months up front) would be refunded pro rata should any tenants leave before the 12 months contract. I appointed this agent in Oct/Nov 2017 as soon as the latest tenant notified of departure date(end of Dec 2017). The agent had full access to the property for viewing, including a pair of spare keys. Before Christmas, I was told they started reference checking on a potential tenant. There was no updates about any reference results. I don't even have the potential tenant's full name or address details.
Then the property became vacant. I requested the keys back from the agent in the beginning of 2018 and asked for the refund of 3 month's letting fee paid upfront.
Today, I was shocked when the agent notify me of £500 'pulling out' fee. I am considering of formal complaint and possible legal actions.
Do you have similar experience?
Fortunately the days when estate agency can charge landlords/tenants random fees are gone, I hope!

[DPT57]

I think it has to depend on the terms of your contract with the Agent. Its not unheard of for Agencies to stitch up landlords with hefty exit fees so read the small print.

I think you have a bigger problem than the Agent by the sound of it. If none of your tenants can stay for even one fixed term I would suspect there is something seriously wrong with the property. Have you asked for feedback from the departing tenants?

[jpkeates]

There's no point in a 12 month fixed term if people are leaving before 12 months.
Stick to a six month fixed term in future.

The agent can't charge you a fee you haven't agreed to.

[newlandlord2016oct]

There is nothing wrong with the property. Tenant No1 went abroad. Tenant No2 moved back with family due to job insecurity. I know landlords are easily blamed for and have to shoulder financial risks. The mortgage payments are much higher than the rental income. I'm requesting the supporting document for the pull out fee from the estate agent and will submit a formal complaint to https://www.tpos.co.uk/ as well as writing to a local MP. I suspect the estate agents are taking advantage of the situation.

[theartfullodger]

There is nothing wrong with the property. Tenant No1 went abroad. Tenant No2 moved back with family due to job insecurity....

But that doesn't mean landlord or agent have to accept notice & THE TENANTS (each of them) remain liable for ALL the rent - EACH!! Why you/agent agreed to waive the tenant's liability is beyond me.

....The mortgage payments are much higher than the rental income. ....

Only interest is a valid expense.

What matters here is what terms you agreed to with the agent: We can read them from here: In your shoes I''d calmly & politely request agent to point out where you agree to such terms (you probably did..)

[newlandlord2016oct]

Thanks for the reply. I am a very reasonable person. So long as it is a legitimate personal reason, I would accept and start looking for the next tenant instead of holding anyone up in the property. Its the standard 12 months contract with 6 months break clause. All previous tenants agreed access for viewings before their contract terminated.

Just found out more about the T&C written in their booklet published in 2016. There is a term for the pull out charge for any offers 'agreed verbally' by landlords. In my case, there was no evidence or documents presented to me(even after the property became vacant at the end of 2017) of the existence of this 'potential' tenant. The estate agent probably was still running reference check but I was given nothing before I requested the spare keys back. When I inform the agent that the property would no longer be on the market, they started applying the 'pull out' fee, even though there is no evidence of the existence of this 'potential' tenant. What am I pulling out from?

[wfd_property]

The mortgage payments are much higher than the rental income.

Sell the property ASAP then.

[tatemono]

there was no evidence or documents presented to me(even after the property became vacant at the end of 2017) of the existence of this 'potential' tenant. The estate agent probably was still running reference check but I was given nothing before I requested the spare keys back.

Did you ask for the referencing documentation? It's yours by right because you appoint the agent and they work for you. If you haven't requested this, then you have no right to complain that you haven't received it. Most LAs, even good ones, won't give you this paperwork by default. If you have requested the docs, what is their response?

From what you've told us of their contract with you and the instructions you gave them, they are entitled to apply their fee if you now pull out. That is reasonable since they've been doing work on your behalf for three months including advertising the property, conducting visits and apparently referencing.

You said that "the days when estate agency can charge landlords/tenants random fees are gone, I hope!" They have never been able to charge "random fees" but only those that are stipulated in contracts. They may illegally attempt to charge fees outside that agreement but can be taken to court over that. However, if the fees are in a contract you agreed to, then it is reasonable for them to claim them irrespective of whether the fees are fair or not.

[newlandlord2016oct]

The service was initially started as no contract no fee two years ago. The agent should have reminded me of the pull out fee especially when they thought an offer was agreed. Fortunately this case can be referred to property ombudsman. No estate should be thinking an offer is on the table just by copying of a passport, nothing else. There is no estate agent service required without landlords demands. When the level of service is going down the drain, we will have to follow up with the formal complaint procedure.

[tatemono]

sorry, not clear why agent should remind you of something you are contractually obliged to... unless they are contractually obliged to remind you (which they are very unlikely to be). In fact, I'm not clear from your posts what exactly has transpired here.

You say that the LA's "service was initially started... two years ago" but in your OP say you "appointed this agent" in late 2017.
You say that you had a "potential tenant" which implies that you instructed the LA to find a tenant but are now saying the LA has done things "without landlords demands."
You say that you didn't know this person's full name but say that someone has copied a passport, sight of which would have given you their full name.

I'm wondering if there's confusion on both sides actually.

[newlandlord2016oct]

Thanks for the reply. The agent should have made it clear a 'pull out' fee would be applicable when they believed 'an offer' was agreed.
No I only received the copy of passport after withdrawing the property and after they informed me of the 'pull out' fee.
This would be the 3rd tenant introduced by this agency. I was not made aware of any 'pull out' fee until this time when I withdrew the property. Previously, it was 'no agreement no fee' and 'find tenant' only service. This time, the only difference(to my knowledge) is that it took forever to get any reference back. I received no paperwork or any photocopy of documents.
Going forward, there will be no demand from landlords for poor quality of estate agency service like this.
Hope this is clear?