Tenant fees for early termination

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    Tenant fees for early termination

    I wonder if someone could offer me some advice on behalf of a friend. He recently took out an assured shorthold tenancy on an unfurnished flat through a letting agency. Shortly after moving in his circumstances changed significantly and he has had to move away from the area. The agent says that the landlord is happy to agree to an early termination of the tenancy providing another tenant can be found and he carries on paying the rent in the meantime. However they also will be charging for the checking in and out, deposit protection and a tenant find fee. Are these costs reasonable? He has taken a video of the property and is going to carry out the viewings and help find the tenant himself. He has no contact details for the landlord.

    #2
    Yes, since this is an early termination of the contract then these fees are payable, if the T had stayed until the fixed term had finished and gave notice no fee would have been levied

    Comment


      #3
      Originally posted by jicms View Post
      The agent says that the landlord is happy to agree to an early termination of the tenancy providing another tenant can be found and he carries on paying the rent in the meantime. However they also will be charging for the checking in and out, deposit protection and a tenant find fee. Are these costs reasonable?
      I think that he would be crazy to agree to that - he pays extra fees and will also pay the rent anyway?
      If they are getting the rent anyway, why would they bother getting a new tenant in when they get paid for doing nothing? It does crop up here from time to time...

      Paying the fees isn't particularly unreasonable in the circumstances, but I would want a definite end to the obligation to pay rent.

      He's in a much stronger bargaining position if he tells them he has got no money, and they can either accept a surrender now or try and claim the rent back from his benefits whenever they eventually get possession...

      Comment


        #4
        There's a balance here.
        The agent is only able to charge their actual costs - they may not realise this, but the Tenant Fees Act limits what they are allowed to charge to their costs.
        They can't charge additional fees for check in and out, deposit protection or a tenant find fee, other than the costs of carrying out the checks, advertising etc.

        But that's a double edged sword, because they also aren't obliged to end the tenancy early either, and, if the friend digs his heels in about the fees, they might reasonably decline to terminate early and simply let the tenant have to continue to the end of the fixed term that they originally agreed to.

        There needs to be a negotiation and some compromise.
        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
          We could do with a test case on this point. A landlord could argue that these are the fees they have to pay their agent so they're not breaching the TFA by passing them on to the tenant. However, the tenant could argue that these are fees they would have eventually incurred anyway but are just brought forward. It would be interesting to see what a court made of the arguments, but in the meantime, I suspect that as JPK says, the alternative is just that the landlord says forget it and just pay rent until the end of the term.

          Comment


            #6
            Originally posted by DPT57 View Post
            It would be interesting to see what a court made of the arguments
            It would.

            The issue is that the gap you have identified, which is that any fee could be legitimised by being charged to the landlord by the agent, undermines the purpose of the regulations.
            The fee would be prohibited if levied on the tenant by the agent, but not if it is levied on the tenant by the landlord because the agent has charged them.

            I suppose you could use the principle that an agent isn't allowed to enrich themselves using their principal's asset, so the profit would belong to the landlord and therefore be prohibited because the agent was simply collecting the landlord's fee.
            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
              Originally posted by jpkeates View Post
              The fee would be prohibited if levied on the tenant by the agent, but not if it is levied on the tenant by the landlord because the agent has charged them.
              I'm not sure about that. I assume that the agent is able to justify their costs to the landlord, in fact the current trend of pricing elements of their service individually probably helps their case. If the fees were not legitimate, then presumably the agent would be wide open to challenges from any landlord.

              Comment


                #8
                Originally posted by DPT57 View Post
                I'm not sure about that.
                If the agent was charging the tenant, their fees would be capped at cost, and they wouldn't be allowed an element of profit.
                If they are charging the landlord, they are allowed to make a profit - which the landlord might object to, but it wouldn't be illegal, per se.

                I accept that my agent is in business to make a profit, so I am not expecting them to be working for cost alone.
                But a tenant is legally entitled to require that they do work for cost alone - which is a mistake when it comes to early termination or assignment.

                It's a common problem with laws relating to business activity, the people drafting them have no idea how a business works or how to incentivise the activities they wish to promote.
                The government wants agents and landlords to allow assignment and early termination of tenancies, but neglected to allow them to make any money from it, so it's a disincentive.
                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


                  #9
                  Originally posted by jpkeates View Post
                  If the agent was charging the tenant, their fees would be capped at cost, and they wouldn't be allowed an element of profit.
                  Actually I don't think we know that. The Act just talks about the agent's "reasonable costs". I guess it would be for that court case to determine whether that includes an element of profit. In the case of the landlord, the Act says the amount should not "exceed the loss suffered by the landlord", which would imply the full costs for which they would reasonably be liable.

                  Comment


                    #10
                    In contract law, costs are costs.
                    They may include an element of someone else's profit, but not your own.

                    But the situations is unsatisfactory, isn't it.
                    If an agent charges a landlord £100 to create a deed of surrender, the landlord can charge the tenant £100.
                    If the agent is charging the tenant direct, the cost might have to be capped at (say) £25 for the actual time taken.

                    So the incentive created is for the agent to charge via the landlord, which results in the tenant paying a higher fee.
                    And, also perversely, the landlord has no way of making any profit and they're the person who makes the decision to agree to the tenant's request for a change.
                    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

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