Avoiding Tenancy Agreement Renewal Fees With A Letting Agent

I read an article earlier on the house ladder website, the article was about abolishing tenancy renewal fees for landlords who have managed the property themselves throughout the agreement.

So basically, if you get a letting agent to find you a tenant, when it comes to the time where the tenancy agreement (the contract) needs renewing, letting agents will charge you again (most charge approximately 10% of your yearly rental income) for keeping the tenant. Unfortunately I have a major problem with that. Letting agents are extortionate; they will show no remorse when robbing from the rich or poor. I understand the initial 10% fee for finding a tenant and performing all the essential credit checks, but to pay again just to renew the contract- that’s outrageous. The agents don’t even have to do any extra work the second time round- so what actually are they charging for? Did they provide me with a service the second time round? They found me a tenant and I paid them a ridiculous amount for it, thank you!!! I refuse to believe that paying 10% for every year that I keep a tenant is acceptable by any stretch of the imagination. Do they still expect me to pay 10 years down the line for keeping the same tenant? Psssh. Dream on, you cowboys.

I’ve been in that situation and this is how I avoided the ridiculous renewal fees. For the sake of protecting myself, I won’t name the letting agent involved, because what I did wasn’t exactly “legit”, so I’m told. Although I don’t think a letting agent can legally prosecute me for what I did I’d rather not take that risk.

I used a local letting agent to get my first tenant simply because I was extremely inexperienced at the time. The concept of finding suitable tenants and dealing with their issues seemed overwhelming for an amateur. The agent found me a tenant; she settled in quickly and all was fine. A year was rapidly come to an end, consequently the tenancy agreement needed to be renewed. I called my tenant and told her I wanted to go manage privately, without the use of a letting agent. She was fine with that because we had a good relationship. Going private made more sense, because whenever there was a maintenance problem she would have to call the letting agent, and then they would have to call me to inform me of the issue. It was pretty long winded, so it made sense to cut the middle man for both efficiency and easy. After the year was up, I was a bit more experienced and I knew I had a good tenant who wouldn’t cause me any problems at all, so I was ready to take on the responsibility of full managing my own property.

One month prior the expiration of the contract, my letting agent called me up and this was said:

Agent: “hey, the tenancy agreement with your tenant is nearly up, would you like it renewed?”
Me: “Yes, but I’d like to handle it privately from now on”
Agent: “I’m sorry you can’t do that. Your tenant is our client, so if you want to go private you will have to find a new tenant”
Me: “What do you mean? I paid you XXXX amount to find me a tenant, and you did. Thank you, but I can take it from here”
Agent: “Ok, but you’re not allowed to do that. You can keep our client if we set the new contract up for you”
Me: “How much will that cost?”
Agent: “£400″
Me: “What? £400, just to set up a contract? I can download one from the internet for free”
Agent: “haha, no you can’t sir”
Me: “I assure you, I can. If not, I can just photocopy the existing tenancy agreement and reuse it. It seems as though you just want money out of me for nothing. This is ridiculous”

We argued for about 30mins, going around in circles aimlessly. By the end of the conversation we were both pretty pissed off. I eventually made it clear that there was no way in hell I was going to give them a penny, especially after the conversation. At the end up it, she threatened me with legal action. I knew there was no way they were going to bother doing that (I called her bluff). In conclusion, I kept my tenant, avoided all fees, and didn’t hear from the agent again.

In retrospect, I did it all wrong- that was my inexperience sharply piercing through. I could have been a lot savvier. I should have just told my agent that I was selling the house and no longer required a tenant. Simultaneously, I could have made an arrangement with my tenant to go along with the story, and for my tenant to tell them that she would no longer require rented accommodation because she was moving back in with her parents. My agent would have been none the wiser and I could have avoided the conflict and the legal threat. Anyways, I knew for future reference.

I’m still not sure how far she could have legally took it, I’m just glad there were no repercussions of my actions. The agent may have had a case, because the tenant was their “client”. So to play it safe, it’s probably best not to tell your agent that you intend on keeping their client without the aid of their management.

It’s a good idea to use a letting agent if you’re an inexperienced landlord or don’t want the hassle of managing your own property. My only issue with letting agents is that they charge way too much, and I believe their price tag isn’t justified for what they do, so I refuse to indulge their greed. In the current booming rental market, I honestly believe there is no need for a letting agent, and I think it’s relatively easy to cut out the middleman, as my article Lack Of Properties On The Letting Market- Time To Cut The Middleman explains. However, if you do use a letting agent to fully manage your property or simply find you a tenant, you can assess your situation when the tenancy agreement is coming to an end. By that I mean, after a year you’ll know whether your tenant is a good tenant i.e always pays on time and keeps the house tidy. If those boxes are ticked, most landlords will decide to keep their tenants. With such good tenants- why exactly would you need a letting agent managing your property? Exactly, you don’t.

Now, I’m not endorsing the tactic of lying to your agent and striking up a deal with your tenant so you avoid additional, rip-off, unnecessary charges, I’m just telling you what I did If I endorsed my own actions in this situation, I’d be a very bad little boy and mostly likely in line of fire.

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