Paying agency intro fee every year

[PML]

My tenant took my flat in February, four years ago. I have had to pay an introductory fee to the introducing agent every year, (as per a clause in the contract which I overlooked.) Originally it was around 8% but two years ago I argued that the agent does nothing all year for me and this was an unfair charge. He reduced the fee to 5.5%. It is due again in Feb 2009. I struggle to find this money every year and find it incredible that I have to pay it at all for him simply to print off four pages of a contract each year. (I used to produce these pages myself for about £1.50, if that!!) Does anyone know how one can get out of this without having to lose the tenant? My tenant is okay and I would prefer to keep her rather than risk not finding another but this fee is crippling me as the mortgage is high and the profit from the flat extremely low. I have just had my accounts done and I made a loss of £3,800 last year so Im really worried about Feb's fee. Can anyone advise?

[PaulF]

I've posted this before. Look at OFT v Foxtons if you do a search on this site, and you can also Google it for more info. OFT think it's an unfair term and Foxtons are disputing this. As it will take eons to sort out you might wish to take it up with your local Trading Standards Office. If you only have the one property let out then you are likely to be considered a consumer, but if you have a portfolio then you are definitely "in business" to which unfair terms do not apply.

The argument is that the agent is actually charging you for doing nothing. What landlords are doing to get round it is to serve Notice on the agent to end their contract. They in turn will probably serve Notice on the tenant but you will have to approach the tenant to undertake a new AST after the current one expires. Make sure you leave a gap from the end of the current tenancy before drawing up a new one.

[bunny]

The argument is that the agent is actually charging you for doing nothing. What landlords are doing to get round it is to serve Notice on the agent to end their contract. They in turn will probably serve Notice on the tenant but you will have to approach the tenant to undertake a new AST after the current one expires.

I am interested in your quote above. My understanding is that the contract between the agent and the landlord is different from the contract between the landlord and the agent. Thus one contract should not impact on the other. Therefore the agent could have a penalty clause in their contract for termination of their contract but this should not have an impact on the tenancy or give them the right to serve notice on the tenant if the contract with the agent is terminated by the landlord.

Any thoughts on this?

[PaulF]

My understanding is that the contract between the agent and the landlord is different from the contract between the landlord and the agent.

One of the same!

[bunny]

One of the same!

Sorry, I meant landlord and tenant, landlord and agent!

[PaulF]

The terms of business between A & L is indeed separate from the tenancy agreement, but I would say you have to end the tenancy so that the A doesn't have any clout if you do concerning potential future fees

[bunny]

They in turn will probably serve Notice .

I didn't read your comment to mean that. Your post reads to me that the agent has a uniliateral right to end the tenancy if the LL terminates the agreement (subject to the terms). Surely only the LL has the right to decide whether the tenancy is terminated or not?

The LL should be able to terminate the agreement with the A even if there are penalties (putting aside the fairness rule on that) without it affecting the tenancy.

[Subway]

Is the fee triggered by issue of a new contract?

If so can't you ask tenant if they would be OK about going to a periodic contract if that would also suit you?

I expect the tenant won't mind financially as I'd guess the agent also charges her a fee for a new contract too!

[agent46]

I've posted this before. Look at OFT v Foxtons if you do a search on this site, and you can also Google it for more info. OFT think it's an unfair term and Foxtons are disputing this

IIRC, the case isn't going that well for the OFT as they were recently refused an interim injunction.

Whilst that is not at all determinitive of the matter, and the American Cyanamid guidelines which govern such applications are different to those which will be applied in the main hearing, it could indicate which way the judge who heard the injunction application thinks the wind is blowing.

The argument is that the agent is actually charging you for doing nothing. What landlords are doing to get round it is to serve Notice on the agent to end their contract. They in turn will probably serve Notice on the tenant but you will have to approach the tenant to undertake a new AST after the current one expires. Make sure you leave a gap from the end of the current tenancy before drawing up a new one.

Do you mean that the LA will serve a s.21 notice on the tenant?

If so, the s.21 notice would be a nullity as the LA cannot act (a) beyond the scope of their authority, or (b) contrary to the LL's instructions.

[bunny]

I didn't read your comment to mean that. Your post reads to me that the agent has a uniliateral right to end the tenancy if the LL terminates the agreement (subject to the terms). Surely only the LL has the right to decide whether the tenancy is terminated or not?

The LL should be able to terminate the agreement with the A even if there are penalties (putting aside the fairness rule on that) without it affecting the tenancy.

Agent 46:

Do you mean that the LA will serve a s.21 notice on the tenant?

If so, the s.21 notice would be a nullity as the LA cannot act (a) beyond the scope of their authority, or (b) contrary to the LL's instructions.


Er, that's what I said

I have a vested interest in the answer as currently dealing with an agent who did just that, serve a S21a when the LL served notice on the A so I should not distract from the case in hand!

[agent46]

Er, that's what I said
!

Er, I know that's what you said, but regrettably Paul_F's responses to your post (a) were as clear as mud, and (b) didn't answer your question.

[bunny]

Oh I see


(So what would your response be if I said:
Not only did the A serve notice on the T but the T left with no notice after over a month but less than two months into the S21a notice i.e before the expiry of the S21a notice and had entered into a new rental period and they only paid the one month's rent not the last month. And the agent thinks that is perfectly acceptable

That'll set the cat among the pigeons but probably a new thread

[agent46]

Oh I see


(So what would your response be if I said:
Not only did the A serve notice on the T but the T left with no notice after over a month but less than two months into the S21a notice i.e before the expiry of the S21a notice and had entered into a new rental period and they only paid the one month's rent not the last month. And the agent thinks that is perfectly acceptable

That'll set the cat among the pigeons but probably a new thread

Then the agent was:

(a) in breach of an express*, alternatively, implied term in the contract to exercise reasonable care and skill (vis a vis the LL); further or alternatively,

(b) negligent; further or alternatively,

(c) in breach of their fiduciary duty to the LL.

and thus liable in damages to the LL for the losses suffered by them as a result of the above.

Furthermore, the tenant would also be in breach of tenancy as a result of them leaving before the expiry of the s.21 notice without serving their own notice to quit. This is because (even if it is valid) a s.21 notice does not absolve the tenant from the requirement to give notice.

Either or both of them could be liable, so if the LL is planning to sue for his losses, he would be advised to issue proceedings against both LA and T as 1st and 2nd defendants.


* check the LA's T&Cs (if any) to see whether there is an express term covering "care and skill". If there is such a term, the LA will almost certainly be in breach of it.

[mind the gap]

Then the agent was: (b) negligent; further or alternatively,

(c) in breach of their fiduciary duty to the LL.

and thus liable in damages to the LL for the losses suffered by them as a result of the above. .

What does 'fiduciary duty' mean, please?

[bunny]

Thanks Agent46. I'm onto them for all that and more but not as well worded perhaps as you. Their "crimes" extend further but we'll see how it goes And they have kindly admitted it in writing but as they say "there's two sides to every story" and I'm sure their perspective will change given time.

Edit, oh and the deposit is going to the dispute service due to rent being unpaid for the last month only the A holds it and is administering the dipsute and as relations have broken down between LL and A, A is not really going to act independently so I have tried to put a stop on the tenants raising a dispute re the rent but I am not sure if I will be successful with my method but worth a try!