Renewal Fee Demanded by Agent

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  • Renewal Fee Demanded by Agent

    My mother has tenants that are happy to continue renting her property after the initial 12 Month AST.

    Despite notifying the Agent and agreeing with the tenants that no new agreement will be required - the Agent submitted a renewal contract a few weeks ago which has been ignored - the Agents then apologised!

    BUT today my mother has received an invoice for another 12 Months commission plus a £25 Renewal Fee!

    The Agents Ts&Cs did mention something about reduced renewal fees but then neither I or my mother picked up on this.

    As I consider nearly paying the Agent £1000 for NOTHING to be grossly unfair - I told them where to go !

    Has anyone here had any experience of being taken to Court by Lettings Agents to recover these stupid renewal fees?

    Gussie

  • #2
    Renewal Commission

    This is a particularly thorny issue. And one that the Office of Fair Trading has recently become involved in.

    In simple terms most agents will charge a finders fee for finding a tenant. This is often a % and is charged for the full period that the tenants remain in the property including any extension or renewal. There is a growing trend now for agents to charge a larger fee at the commencement of the tenancy as a one off regardless of any renewals. The disadvantage of this being that if the tenants vacate after six months you will have paid a great deal more that the % charge previously levied.

    However, the office of Fair Trading have become involved and stated that agents should not be entitled to charge a full years commission as they have not really done any work. This is a new finding and is not known by many agents. I advise you to call the OFT to explain your case.

    The chare for the renewal admin will be detailed in you Terms. If the charge is for the document that you are not signing then you do not need to pay. If it is for associated admin and time spent then it may become payable.

    Your agent is also forcing an odd charge for a periodic tenancy. If they have invoiced for 12 months is this becase unbeknownst to you the tenant has signed a renewal document?

    Finally a word of caution. All the firms I have worked for have operated on a % find only charge. This is charged on the length of time and not the contract term which is a separate issue. I understand that this will have to change in the future but we have won many a court case in the past. Make sure you follow the advice of the OFT and don't end up in court unprepared.
    For the avoidance of doubt, I am not a solicitor nor a specialist. I have simply spent many years in the business and am expressing my opinions. I would urge caution to any individual using these forums as a sole basis for decision without first speaking to a solicitor.

    Comment


    • #3
      Thanks, I've emailed the OFT with the details of my complaint.

      The Agents actually requested the first 6 months Commision fee and a £25 Renewal fee - but I know from last year that they would ask for the rest after 6 months!

      I'm appalled by their behavior - they only got me the tenants by a fluke and they never showed anyone round!

      They did very little - maybe one or two ads in the local Property Paper - they got £950 plus £70 for the original contract and now they're asking for another round - what about future years - is my mother expected to pay out nearly £1000 every year!!!!

      Gussie

      Comment


      • #4
        That may well be the terms that she has agreed to.

        You mention that they did not show the tenant around. What did they actually do? The charge is for the introduction of the tenant, this may also be worth pointing out to the OFT.
        For the avoidance of doubt, I am not a solicitor nor a specialist. I have simply spent many years in the business and am expressing my opinions. I would urge caution to any individual using these forums as a sole basis for decision without first speaking to a solicitor.

        Comment


        • #5
          Originally posted by mjpl
          That may well be the terms that she has agreed to.

          You mention that they did not show the tenant around. What did they actually do? The charge is for the introduction of the tenant, this may also be worth pointing out to the OFT.
          A couple of adverts only - they did not even show the current tenants around - I did ! That was their one and only time they offered anyone to see the property! And it was an Introduction Only service my mother opted for.

          The more I think about this the more incensed I get.

          Gussie

          Comment


          • #6
            Gussie. I'm the bloke you need!
            1. Under the Unfair Terms in Consumer Contract Regulations 1999 the agent must advise a client of any fees that might be payable in advance of their agreeing to employing them. Anything introduced later can be disregarded, unless a new Terms of Business is drawn up and your mother agreed to it.
            2. An agent is not allowed to charge a fee for "renewal" of an AST if they were instructed not to do anything, as in your mother's case.
            3. Fees should be "reasonable" but if the agent charges a percentage of the rent then it's considered to be acceptable for an introduction, but not for "renewal".
            4. You must not equate an agent's luck in finding your mother a tenant quickly, and the fact they only had to carry out minimal advertising; that's not an issue when comparing the amount of an initial introduction fee. I've heard it all before! Would she like the agent to take 2 months and spend £500 on advertising before finding you a tenant, and the subsequent loss of rent to her instead? No! I thought not.
            5. If your mother asked for an Introduction Service only then the agent should not levy any further fees on her, even if the Terms of Business may differ, as I've said in (2) above.
            6. Taking the case to the OFT is fine, but don't expect an early response as they are extremely busy. When I had to write to them, it was months before I received a reply. Your local Trading Standards Officer should be the first port of call, and they might help!
            7. Get your mother to demand the return of the "renewal" fee, in writing or threaten legal action; it might be the quicker route.
            8. If they are members of one of the usual three bodies about which I keep mentioning (NAEA/ARLA/RICS) complain about unprofessional behaviour.

            Unfortunately the UTCCR's have guidelines, for which only the courts can decide whether they are fair, or the OFT. However, you have a pretty good cause for taking the matter further as indicated.
            The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

            Comment


            • #7
              the agent must advise a client of any fees that might be payable ...

              Nothing was made clear verbally at the time - only the small print in the Ts & Cs which has unfortunately now come to light - I remember the Agent just mentioning the Commision for the 12 Month contract - nothing was stated as to what would happen thereafter - my mother innocently assumed that would be it!

              if the agent charges a percentage of the rent then it's considered to be acceptable for an introduction, but not for "renewal" ...

              Do you mean that if NO new contract is drawn up ie the original AST becomes periodic as in our case then it's considered unacceptable for the Agent to charge another lot of Commision and thereon year after year assuning the same tenant stays - a £1000 every year !!!

              If your mother asked for an Introduction Service only then the agent should not levy any further fees on her ...

              She did! It was Introduction Only not managed in ANY way - she collects the rent - the only thing the Agent has is the Tenants deposit in some special account.

              demand the return of the "renewal" fee ...

              No money has been paid yet, only invoiced - Agents were paid their full fees for the initial 12 Month period last year.

              If they are members of one of the usual three bodies ...

              They are members of ARLA but the cynic in me suggests these bodies look after their own kind

              I'll take a trip to the Local Trading Standards Office one day next week to see if they can help

              Gussie
              Last edited by gussie; 21-07-2005, 19:05 PM.

              Comment


              • #8
                This is the reply I got from ARLA ...

                --------------------------------------------------------------
                Thank you for your email

                We would be interested to hear what the OFT and Trading Standards views are on this particular case.

                regards
                ARLA
                ---------------------------------------------------------------


                Not sure what to make of this - but I suspect they are just washing their hands of this

                Popped into another Agent this morning and pretended to be a potential Landlord - they were a bit sheepish about renewal fees - said that they DO charge BUT it could be negotiable!

                I said what about waiving any renewal charges and they refererred me to the absent office manager!

                A BUNCH OF CROOKS THE LOT OF THEM !!!!!!!!!

                Gussie

                Comment


                • #9
                  Originally posted by gussie
                  the agent must advise a client of any fees that might be payable ...

                  Nothing was made clear verbally at the time - only the small print in the Ts & Cs which has unfortunately now come to light - I remember the Agent just mentioning the Commision for the 12 Month contract - nothing was stated as to what would happen thereafter - my mother innocently assumed that would be it! You don't need to "assume" anything - if it's not written down then it's tough on the agent.

                  if the agent charges a percentage of the rent then it's considered to be acceptable for an introduction, but not for "renewal" ...

                  Do you mean that if NO new contract is drawn up ie the original AST becomes periodic as in our case then it's considered unacceptable for the Agent to charge another lot of Commision and thereon year after year assuning the same tenant stays - a £1000 every year !!! You're dead right it's unacceptable

                  If your mother asked for an Introduction Service only then the agent should not levy any further fees on her ...

                  She did! It was Introduction Only not managed in ANY way - she collects the rent - the only thing the Agent has is the Tenants deposit in some special account.

                  demand the return of the "renewal" fee ...

                  No money has been paid yet, only invoiced - Agents were paid their full fees for the initial 12 Month period last year. I would definitely ignore the invoice!

                  If they are members of one of the usual three bodies ...

                  They are members of ARLA but the cynic in me suggests these bodies look after their own kind In ARLA's case they outsource complaints to the body that currently runs the Tenants Deposits Scheme for Regulated Agents. I'm really surprised you have had such a bland response to your complaint. I think they want to see your own enquiries concluded first as you have to do before they take any action.

                  I'll take a trip to the Local Trading Standards Office one day next week to see if they can help

                  Gussie
                  I've will also answer your next post separately as I read it first.
                  The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

                  Comment


                  • #10
                    Gussie. I know the CEO of ARLA, Adrian Turner, personally, as we sit on the same exam board. However. I'm not a member of ARLA, but the NAEA where I'm an Assistant Business Practives Officer and deal with complaints from members of the public about this organisation. I wouldn't intervene anyway in ARLA's procedures even if I could as it would be extremely unprofessional of me to do so.

                    Originally posted by gussie
                    This is the reply I got from ARLA ...

                    --------------------------------------------------------------
                    Thank you for your email

                    We would be interested to hear what the OFT and Trading Standards views are on this particular case.

                    regards
                    ARLA
                    ---------------------------------------------------------------


                    Not sure what to make of this - but I suspect they are just washing their hands of this

                    Popped into another Agent this morning and pretended to be a potential Landlord - they were a bit sheepish about renewal fees - said that they DO charge BUT it could be negotiable!

                    I said what about waiving any renewal charges and they refererred me to the absent office manager!

                    A BUNCH OF CROOKS THE LOT OF THEM !!!!!!!!! No, they're not actually and you will find that there is the odd "bad penny" in any trade you wish to name.

                    Gussie
                    The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

                    Comment


                    • #11
                      On seeking further clarification from ARLA I got this ...

                      -------------------------------------------------------------------
                      The reason for our reply was that your original email did say that a clause charging for renewals was in the signed terms of business.

                      We can understand your frustration over these charges, however, at present there is no law against them. Any clause can be referred to the OFT if you feel it is unfair and it will be for them to decide if the wording of the clause is fair or not.

                      Regards
                      ARLA
                      --------------------------------------------------------------------

                      The exact wording in the Agents Ts & Cs are shown in the attached scan (name of Agent removed).

                      My mother and I did not even look at the 25 pages of Ts & Cs and I don't even remember her signing them BUT the greedy Agent is pointing his grubby fingers at Para 18.

                      Gussie

                      Comment


                      • #12
                        I don't like these continued charges where the tenant has decided to carry on with the tenancy. However, once these were the province of London agents only; now increasing number of agents do this.

                        I think that the querist's case is not as strong as everyone is making out because of the clause in the Terms and Conditions in the contract. This can only be ignored if the court determines that this is an unfair term and of which the landlord could not have been aware of.

                        I find that hardly any London agents wish to take on the property without the continued commission year after year.

                        I agree it is not justified; it would be nice to know the legal position.

                        Ramnik
                        Private advice is available for a fee by sending a private message.

                        Comment


                        • #13
                          Have a look at

                          http://www.painsmith.co.uk/painsmith...unfairterm.pdf

                          Very interesting reading, some relevant snippets ...

                          -------------------------------------------------------------------
                          The Office of Fair Trading (OFT) is the “watchdog” for unfair terms in contracts. If a complaint is received from an individual, it must be investigated unless it is deemed to be frivolous. Complaints can also be made by an individual to the Trading Standards Officer who will seek guidance from the OFT.

                          If the OFT think a clause is unfair they can seek an injunction preventing the Landlord or the Agent using the clause. In practice, they tend to write to the party asking them to re-draft or remove the offending clause from the documentation and requesting an undertaking that is a legal promise, not to use or rely upon the wording or clause that is deemed to be unfair.

                          Any clause within a contract that gives one party the impression that they have limited or no rights has the potential to be unfair. The OFT will insist that a clause is altered, if it could be interpreted to the detriment of the weaker party.

                          Currently the OFT are working on a document stating the wording and clauses that they think could be unfair. Once this is finalised it will be used to review any tenancy agreements referred to them, where there is a complaint.

                          The Unfair Terms and Consumer Contract Regulations 1999 are part of the consumer law coming in from Europe. While the OFT are taking a strong stance, it is difficult to visualise how they will be enforced long term and whether the courts will take them into account in possession proceedings or claims for damage.

                          ....

                          Renewal commission for letting

                          The OFT think it unfair to charge commission if a tenancy is renewed for a further fixed term when the landlord has only asked for a Letting or Introductory Service from the agent. The OFT state that the agent has not carried out any further work or services for the landlord therefore any further charge would be unfair. The same thinking does not apply to Rent Collection Services or Management of premises.

                          -------------------------------------------------------------------


                          Gussie

                          Comment


                          • #14
                            Gussie. Pain Smith would drive a Coach & Horses through those terms & conditions, because (a) they are unfiar, and (B) they are not clear by any means.

                            Southend-on-Sea Trading Standards Office took Countrywide Lettings to task about 3/4 years ago over several of their unfair terms, and they had to alter them considerably. I feel this is in the same catagory and just because it's there in the contract the agent is not actually doing anything for their (extortionate) fee, and the OFT is very clear in that renewal fees have to be "reasonable" and reflect the mount of work that actually is done!

                            I think all this is superflous anyway as your mother wanted a "Let only" contract and the agent doesn't appear to have any justification in making such a charge.

                            Stand your ground and tell the agent you've referred it to the TSO & OFT. They might start taking you seriously!
                            The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

                            Comment


                            • #15
                              Originally posted by Paul_f
                              Stand your ground and tell the agent you've referred it to the TSO & OFT. They might start taking you seriously!
                              Many thanks for your support and we WILL be defending our position!

                              Gussie

                              Comment

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