Letting Agents Tenancy Renewal Fees

The Origins Of Tenancy Renewal Fees

What is a Tenancy Renewal Fee?

If you’ve used a letting agent to source a tenant, the chances are you’re going to be inflicted with a tenancy renewal fee if you wish to renew the tenancy with the tenant after the fixed term expires (typically, it’s after 12 months).

Most letting agents charge landlords approximately 10% of the annual rental return (which can stack up to a large amount), for keeping the tenant they sourced. That fee is what is known as a “Tenancy Renewal Fee” Some letting agents even have the audacity to charge the tenant with an admin fee to renew the tenancy (as well as the landlord).

Renewal Fees are unfair

Unfortunately, I have a major problem with tenancy renewal fees. 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? Your guess is as good as mine. 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? Dream on. Cowboys.

How I Avoided renewal Fees

I’ve actually been in that situation where a letting agent wanted to charge me for a renewal fee- it felt like they were charging me for a service I had already paid for. For the sake of protecting myself, I won’t name the letting agent involved, because my method of avoiding the fee wasn’t exactly “legit”, so I’m told.

A while back I used a local letting agent to find me a tenant and fully-manage the tenancy. Eleven months later, the fixed term in the tenancy was due to expire, consequently the Tenancy Agreement needed to be renewed, unless I want the tenancy to become a Periodic Tenancy.

I wanted my tenant to renew so she was tied down for a set period, but at the same time I didn’t want the tenancy fully-managed by the agency anymore. I contacted my tenant and told her I wanted to manage the letting privately, without the use of a letting agent. She was fine with that because we had a good relationship, so cutting out the middleman made sense.

One month prior the expiration of the contract, my letting agent contacted me, and this was how the conversation went:

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 another penny for doing no extra work, especially after our conversation. At the end up it, she threatened me with legal action. I knew there was no way she was 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, calling her bluff and refusing to pay the renewal fee probably wasn’t the best way to handle the situation. I’m still not sure how far she could have legally taken it, I’m just glad there were no repercussions from my actions. However, there are better ways to avoid renewal fees.

Just to clarify, while I was having the conversation with the letting agent, I wasn’t sure whether there was any mention of a tenancy renewal fee in the contract I signed with them or not. But it was the first I had heard of it, so I just assumed I never agreed to any such thing.

How to avoid Tenancy Renewal fees
Method 1: Ask your letting agent whether they charge Tenancy Renewal Fees

Not ALL letting agents charge a tenancy renewal fee. So rest assured, even in this snake filled industry, there are still a few good men standing.

Before agreeing to use the service of a letting agent, ensure to enquire whether the agent charges the fee or not. If they do, find out how much, and whether they’re willing to waiver the fee. Depending on how business is, they may be prepared to drop the fee. I would get it in writing though :)

Method 2: Allow the tenancy to roll onto a Periodic Tenancy

The tenancy renewal fee is usually only chargeable if the tenancy is “renewed” i.e. new contracts are signed, and the tenant is tied in for a new fixed term. However, if you don’t sign new contracts, the tenancy becomes what is known as a Periodic Tenancy Agreement. If you allow this to happen, most agents can’t charge you a “Tenancy renewal Fee”

With a Periodic Tenancy, the same terms and conditions apply to what’s stipulated in the existing Tenancy Agreement, but the contract becomes “periodic”, which is dependent on how often the rent is paid. For example, if the rent is paid monthly under the original fixed term, this will become a monthly periodic tenancy, or a weekly periodic tenancy if that’s the payment schedule.

So, if the agent tries to charge you with a tenancy renewal fee, just say, you’d like the tenancy to roll onto a periodic tenancy. That may avoid the fee, depending on what is written in the contract you signed with the letting agent.

Method 3: Is the Tenancy Renewal Fee clearly stated in the contract?

When using a letting agent, you’re usually required to sign a contract with them. In the contract, there should be a clause which refers to a renewal fee (that is, if they charge the fee, of course). If the tenancy renewal fee is NOT in a contract you signed or not stated clearly, then there’s a good chance you won’t be liable to pay. There was case that went to court a few years ago, which involved Foxtons Letting Agents. The judge ruled that because the fee wasn’t stated clearly in the contract, it wasn’t enforceable. You can read more about that case here, High Court rules against Foxtons.

Method 4: Talk to your tenant

I wouldn’t advise following the rules of method 4, because I’m not sure how legal/illegal it is, or what the implications would be you got caught doing it, but I’ve heard of other landlords doing it :)

If your letting agent is adamant on extracting the renewal fee from out of your pocket, then you could simply tell the agent that you no longer want to renew the contract with the tenant(s). Simultaneously, make arrangements with the tenant to go along with the story, and tell them to in form the agency that they would no longer require rented accommodation.

At this point, landlord and tenant can continue with the arrangement they’ve always had. And if they wish to rearrange a new Tenancy Agreement between them, they can do so.

146 Comments- join the conversation...

Showing 96 - 146 comments (out of 146)
Guest Avatar
chris 21st June, 2010 @ 13:23

my tenancy is due for renewal july 2010 the past 12 months wiv the letting agent have been a nightmare and so dec last yr myself and the owner of the property started commumicating wiv eachother and just using the agent as a rent point now we have had numerous problems wiv the letting agent well one particular employee we was informed he had left so all went quiet he now is bk wiv the company and so the trouble has begun again and this started within less than a week of this person being back now as i stated my tenancy is ending july this yr and we have a new battle on our hands because as this person is bk working for this company myself and the owner of the property want to renew wiv them the owner of the property stated 6 months ago she would not renew wiv them and again the other month this was done in writing to the company i also have sent a letter stating i wish to end my tenancy but they are now telling the owner that because she wants to keep us as tenants she will need to pay £1800 +vat and all other fees n charges incured.....? any help or info anyone can giv will b greatly recieved

96
Guest Avatar
chris 21st June, 2010 @ 13:27

the above statement made by myself the 6th line down has an error its menna say dont not want x

97
Guest Avatar
karen ligi 7th July, 2010 @ 10:31

Please can someone advise me.

My rental property is being managed by a letting agent. Recently the current tenants decided that they would like to stay for a further 6 months so the agency drew up another contract, charging me 95 pounds. Since the contract was proposed, the tenants have changed their mind. The agency have offered to reimburse me half of the 95 pounds as a 'goodwill gesture.' Should I not get all of the money back? After all, it was the tenants who pulled out of the agreement!

98
Guest Avatar
Redders 26th August, 2010 @ 16:26

I really don't understand you people.

I've been letting my property privately for 3 years now. I pay no agents fees, and charge my tenants nothing but the rent. Credit checks cost a few pounds. An inventory takes 5 minutes, and I know that everything is being done right.

If you don't want to pay somebody thousands to do nothing then stop letting through agents! I'm trying to rent my first home outside London and private lettings are non-existent. Therefore I have to go through an agent, who will charge me the best part of a £500 in fees. When I try to negotiate, the answer is always the same. "If you're not happy to pay that much then we're always prepared to go to the landlord with a lower offer."

Thus due to their greed and your stupidity for using them, prospective tenants will put in lower offers because they are not prepared to pay these exorbitant fees. So you lose out.

99
Guest Avatar
Pete 26th August, 2010 @ 16:33

I now have a fantastic agent and achieve fantastic rents for my property. I don't consider my agent greedy or me stupid. I have always secured 100% of the asking price. So I do not lose out. Suggest you carry out a little more research.

100
Guest Avatar
Gina Parr 20th October, 2010 @ 14:26

We have a letting agent who fully manages our properties. We signed the agreements which say " for the duration of the tenancy " We now want to manage ourselves. Our tenants all look happily settled so will we really have to wait till those tenants leave .... to end these agreements. Please help!

101
Guest Avatar
JODI 16th November, 2010 @ 12:08

Hi, help needed. My tenancy is due to end in december. it is an assured short hold with an agent. My landlord and I would now like to deal direct. I told the agents and they wanted the landlord to confirm this but in between times the agents have told the landlord he must pay them a 'finders fee' as far as im currently aware my landlord had only signed up with the agent for 6 months as I did so surely the agent cant force the landlord for this additional payment. The agents also want me to pay 6 months in advance as I did when I 1st came to the property? Im a sinle parent with a disabled child and theres no way I can afford to keep racking up over 6000 every 6 months..any advice appreciated

102
Guest Avatar
Ben 4th January, 2011 @ 19:39

It is convenient for most people to bash letting agents over the head about renewal fees. I am a letting agent and have very fair terms of business (not small print) on renewal fees and also the client's right to a full refund of fees paid pro-rata if a tenant leaves before the expiration of the signed terms. Letting a property particularly in London where I operate is quite tough with parking charges (tickets a lot of times), staff salaries and advertising and the odd 8% + VAT we charge is just about right. Whenever a tenant leaves early we promptly refund fees paid to us to the landlord. Any landlord that expects his/her agent to refund fees paid should also expect that the agent to be entitled to a renewal fee. If the landlord has a problem with this, he/she shouldn't engage the services of an agent. Most agents with the exception of a few are quite clear on the their renewal charges.

103
Guest Avatar
Jay Modi 21st January, 2011 @ 05:41

Renewal Fee

12 months ago an agent X found me a tenant and i gladly paid the agent a 9% fee for "let only"

For the last 12 months i have managed the tenent privately and now he would like to stay on for another 12 months. Seems as 11 months are up the agenet had a reminder in their calendar to call me and ask if the tenent wanted to stay on and if so i owe them another 9% fee

I am managing the tenent myself, i will do my own credit check on him this year and draft my own tenanay agreement. I argued with the agent and they said bottom line i have to pay the 9% fee. Is there any work around?

I very much trust this tenent and read above "Give the tenant notice to vacate the property. After the end of the tenancy, have a break period of say a few a week where they can stay rent free and then have a brand new private agreement with the tenant"

Would this work? I am even happy to let him stay rent free for a month, register the council tax and electric in my name for 1 month and pay both those myself as I strongly disagree with paying abother 9% to the agent

Any feedback would be great

104
Guest Avatar
Francine Asonibare 27th February, 2011 @ 17:02

Have been letting a property since 2005. I used an Agent's Introduction Service. I did not notice the Renewal Clause which says "where tenants have been introduced to the landlord and remain at the property even if... are not retained as managing agents or introduction agents" When the contract expired they sent someone to find out if the same people were living in the house by knocking on the door. After seeking legal advice I began paying the fee (7.5% + VAT)but during the Foxtons case, I queried it and stopped payment. all went quiet. They have just sent me a bill for August 09 - Aug 11(yes the Tcs give the right to pay in advance). another solicitor says I have no choice Help - I need this money for repairs etc

105
Guest Avatar
redders 27th February, 2011 @ 20:24

Just get your tenants to tell the letting agent they are moving out, or tell them yourselves. then set up a private lease agreement. simples.

Don't give these scumbags any more money, ever.

"I am a letting agent and have very fair terms of business (not small print) on renewal fees and also the client's right to a full refund of fees paid pro-rata if a tenant leaves before the expiration of the signed terms. Letting a property particularly in London where I operate is quite tough with parking charges (tickets a lot of times), staff salaries and advertising and the odd 8% + VAT we charge is just about right."

Just about right for doing nothing? No wonder you slimeballs are hated as much as traffic wardens.

"Any landlord that expects his/her agent to refund fees paid should also expect that the agent to be entitled to a renewal fee."

Why? You've been paid your finder's fee, you found, you got paid. End of story.

106
Guest Avatar
Francine 1st March, 2011 @ 09:04

they signed a private lease in 2006. The agent then knocked on their door and said "are you still living here". They said yes. The agents a large established sales and letting agency in Herne Hill,London wrote me to say that the terms apply "as long as the tenant is living in the property" and I should pay up

107
Guest Avatar
Tom C 1st March, 2011 @ 21:48

Letting Agency Director's Point Of View....

I am the Director of a small Docklands Letting Agents in East London.
I understand that some people have this perspective of "Renewal Fees".
However, the renewal fee is a vital part of a Letting Agencies revenue and without it, agents would close down rapidly, leaving Landlords with the option of using either a) An online forum to advertise themselves, B) Cowboy Agencies who are out to steal Landlords money (and there are many cases of this happening).

There has to be compromise.
If you are a person who does not want to pay a renewal fee, you may not understand the implications of this or you may understand and simply not care. Either way, there are the options A and B above for you.

BUT... If you choose to use an established company, as many of you have mentioned in previous posts, then you are getting a whole world of advertising, marketing, viewings, offers, an accurate valuation so you can maximise your income, ALL FOR FREE!
You do not pay a penny until a tenant is found.

How does an agency afford such a practice? Simple, it has residual income to cover the short fall. Renewal Fees.

If you do not want to pay a renewal fee, then you should not use an established letting agent. There are other options for you.
But if you appreciate the Speculative work they do, some of you even using 4 or 5 agents at once and only paying one of them, then you need to understand that you have had your free services in advance. Also, in all of these cases, the letting agent has the right to sue for breach of contract which is what we do at my agency. The Terms & Conditions state clearly that there is a fee to pay for a renewal, at a reduced rate and with no extra "Contract Fee" to anyone. The Landlord may also pay monthly so they dont have one big bill every year. But using our services and then making up lies about the tenants moving out is dishonest and actually disgusting. Just because noone is watching me in Curry's doesn't mean I walk out with a new TV under my arm.

Honesty works 2 ways people. Either pay the renewal when it comes around or use Gumtree to figure out how much your property is worth and let it yourself.

108
Guest Avatar
Francine 5th March, 2011 @ 16:18

Dear Tom C
thanks for being brave enough to enter the lions den and put forward the view of the lettings agency. You are the first person to explain that the 'renewals fee' is used for residual income to pay for marketing, viewings(as in wages of staff), valuations.I guess this includes day to day running of the office, and for some agencies, cool-looking SMART cars.
I thank you for explaining.
Therefore there should be a time limit or a money limit on this contribution. I paid up for four years. once the tenant moves out, I'll be off to the houseladder website where even the premium package if I felt so inclined would cost me alot less

109
Guest Avatar
Jill Smith 11th March, 2011 @ 11:17

I read with interest the article about renewal fees and as a Letting Agent I agree that most agents charge scandalous prices for doing very little. The previous agent's response about making up residual income is partly true, but all of the 'marketing' related fees should be accounted for in the initial fee.
In our Agency, we pride ourselves on providing a good service at fair prices and we charge a flat rate of £25 to renew a tenancy agreement. As you say, all the work has been done for the marketing, it's just a matter of drawing up a new document (or an extension of the original agreement which is a one-sided sheet).
Not all agents are out to rip off their clients (the Landlords). If we treat our clients well, they will stay with us, give us more business and recommend us.
We are sick of the bad name that Lettings Agents have and want to 'buck that trend'.
Jill Smith
Stone & Co, Stourbridge

110
Guest Avatar
Liam Nunes 26th May, 2011 @ 16:46

I’m hoping someone here has some information and can help me make some decisions too.
Basically I moved into a new property last September with my partner. It’s rented from a nice couple who moved abroad and managed by ‘Paul Simon Estate Agents’.
Since the start things have been pretty bad with our agent. First – and mainly - the toilet flush broke, and there were a few other small issues. These dragged on for months, right up past Christmas till January. Getting things fixed was a slow business. Most of the time, the agents didn’t return calls or keep appointments. The plumbers/builders that the agents used seemed particularly poor. They too missed appointments, didn’t finish work, etc. In the few weeks before Christmas, I started to become very angry over all this, and sent a few letters/emails about the situation, informing them that unless action was taken I was going have the work completed myself. We were also in contact with the flat owners, informing them what was happening. They interceded on our behalf and sent some quite angry emails (and copied us in) to the agents telling them that they were paying a lot of money to deal with all this and they shouldn’t be having to keep an eye on them etc. Finally after Xmas the toilet was fixed. I then sent a long complaint to them regarding the length of time it took to sort and how everything was dealt with – remember we didn’t have a proper toilet for almost 5 months; we had to pour buckets of water down the bowl all that time. The agents replied to this with a letter, filled with mistruths and strange lies. Stating that we had refused them access to the property, we had missed appointments and that the plumbers had been ‘sent away’ by my mother on one occasion! The whole thing was just a joke. I sent a massive reply refuting practically everything they had said – most of it I was able to prove wrong and so the agents said they would look into it and get back to us. They haven’t.
In the meantime, we also had a water leak in our kitchen from the flat upstairs over the New Year. That was dealt with fairly quickly, but it’s again took a long time to completely fix the damage (Paining the walls and ceiling etc.) – only just finished in May! We had other issues with our electrics, and then again with the toilet – this time the pipes and plumbing. We’d reported this back in December and think it had something to do with not having a flush on the toilet for so - long causing waste to build up - but nothing was ever done about it until the last few weeks.
This all a bit disjointed and hard to explain – there are about half a dozen other things I could complain about - but the general gist is that the agents:
-Don’t reply to contact – Letters, emails or phone calls
-Fail to have things fixed in a timely manner
-Are slow and quite often rude

The worst part about this was our toilet. We had no flash for the first 3-4 months and then a continually blocking/overflowing toilet for the next 3 months. That alone I feel is almost criminal.
What I want is to take some kind of action against these agents. Now I know they’re not part of any registered schemes (Big shock) so that route is closed. Is there anything else I can do?
The second issue is this. I do NOT want to have to deal with them for a second year. We’re paying £1250 P/M, and they take about 15% of this, whist doing very little. I seem to spend more time on the phone, writing letters and chasing things up than them. Assuming my landlords/owners agree, is it possible to change to another letting agents? Or even pay direct to my landlords and cut out the agents? I’ve read all sorts of things about you not being about to ‘leave’ the agents and go direct with the owner which sounds very strange to me, after all, the landlords own the flat! Although I’m not really aware what kind of contract the landlords have with the agents.

So, any ideas, information and help?

111
Guest Avatar
Nicola 8th September, 2011 @ 09:05

My tenant has lost his job and can no longer afford the rent.

I have agreed with my letting agent that if she finds a new tenant he can move out as soon as the new one can move in as I see no point in putting him under more financial strain.

Because of him losing his job I am having pay the agent the fees again to find a tenant etc (which I think are too high but I have negotiated down a bit). I just wanted to find out the general feeling of if this seemed right?

It's not my fault that my tenant lost his job but yet I'm having to pay to find another tenant within the original agreement. I have agreed via email that I wanted the agent to do this so I know I've agreed to pay the fees again but out of interest wanted some opinions.

Thanks - great forum by the way - really useful reading everyone's circumstances.

112
Guest Avatar
Paul30661 8th September, 2011 @ 09:16

The agents contract is with you and the tenants contract is with you (i.e. the tenant and agent do not have a contract) You have instructed the agent to find a replacement tenant and they will charge a fee for doing this (why wouldn't/shouldn't they ?). You have the right to re-charge this fee to your tenant, (though see below for caveats to this), after all you are reducing his potential losses under his contract with you, i.e. he can leave early and save rent. You should have agreed this with your tenant either at the outset of the agreement or as part of releasing him early.

Caveat: You cannot recharge the tenant the reletting fees if he was near to the end of his fixed period in any case - when he could have given notice to leave without a fee. Generally you would have to give a pro-rata reduction in the reletting fee the nearer to the natural end date of the tenancy.

The sticking point is that it sounds as if you will have a debt from the tenant for both rent and fees and overriding everything is that there is little point in pursuing someone for a debt unless you know or think they have the monies to pay it.

That all sounds negative, so to end on a plus point :-) it might be that the new tenants are better and/or at a higher rent in the current market. Though don't fall into the trap of a lot of landlords who seem to expect the rent to automatically increase from one tenancy to the next without investing any money to maintain the property in the original condition.

Mantra: Rent is income - not profit

Hope that helps

113
Guest Avatar
Luke Harrison 8th September, 2011 @ 09:20

Unless your contract with the letting agent has a free new tenant find clause you will have to pay again I am afraid. You could, however, pursue the tenant for the unpaid rent and the the cost of finding a new tenant. I would not risk allowing the tenant to stay. I suggest you start the eviction process because otherwise you could find a tenant and he old one may not move out. If you need further help please contact hk@dolegal.co.uk.

Regards

Luke

114
Guest Avatar
Andy W 2nd November, 2011 @ 17:38

Hi,
Im a tenant living in Reading, just about to renew the contract on my flat for another 12 months and recieved the Renewal Agreement from the lettings agent today, which by the way is a two page doucment. For the pleasure of printing said two page doucment they want to charge me and my flatmate a £121 renewal fee! Now I've heard of renewal fee's for Landlords being charged but now this for tenants as well?! Its unreal, what exactly is thay £121 for?!
Anyway, does anyone know if i can contest this and not have pay? Will be sending an email to them shortly anyway letting them know my disgust but if anyone's got any further advice would be appriciated.
Thanks
Andy

115
Guest Avatar
liansef 27th November, 2011 @ 17:47

i want to buy a activation key for my windows 7 professional, where can i buy a discount key? thank you

116
Guest Avatar
Pedro 28th November, 2011 @ 16:51

Very useful advice, thank you!

We're currently in a war of attrition with our Estate Agent.
Today I received a jaw-dropping email from them, in which they admitted that they were unable to justify the fee on any grounds other than that we were contractually obliged to pay them.

In my view this is truly extraordinary behaviour - in no other industry is it considered acceptable to charge without providing some form of service.

117
Guest Avatar
Francine 1st December, 2011 @ 21:52

to Pedro comment 118

The smarter estate agent refers to these 'fees' as a commission and not as renewal feels. If you have signed to wording similar to the one i signed, it says "We will liaise with the tenant and the ladlord for all renewals and invoice for all further services rendered. We are entitled to charge commission for the entire term of the tenancy where tenants have been introduced to the landlord and remain at the property even if Petermans & Co are not retained as managing agents or introduction agents. The charge will be made on a six monthly basis at a rate of 7.5%+VAT......., however this will not include any services.
Th key words come at the end. The commission is not linked to any further services. Had there been other services I would have been invoiced. However I signed up to an introduction service, and I have been managing the renewals/ new contracts.
I took legal advice and was told that as long as the original tenant(s) were resident there, then even if a new contract was signed with other family members, I was liable for the money. Post-Foxtons Ruling there was a couple of years of silence after which the agent threatened legal action. It is relatively easy to check who is living in a property - so in short this type of contract enables the agent to be paid ad infinitum for nothing.

Your options are to raise the tenants rent at the earliest legally available opportunity to cover the cost; or to ask them to leave at the end of the contract (giving 2 months notice); and to warn other landlords about the agent via online reviews.

118
Guest Avatar
Kylie 26th December, 2011 @ 21:54

We are tenants who are presently renting in a rural area. We have no real option but to look for property advertised through agents, our last property was through an agent, where the same occurred. We are about to renewal our tenancy for the third time, the first (on this and our last property) was for only six months as that's the maximum the agents would allow. We used different agents on both occasions. So this is our third tenancy at our present property. Every time we have had a tenancy renewal, including the initial one, it is costing my partner and I £98 each for "renewal fees". We both work part time jobs on low salaries as we can't work at the same time as we have three children, one of whom is disabled and we can't find child-care for the holidays if we both worked the same time, so we have no option but to be in this situation. Each year, we find this £196 "renewal cost" extremely hard financially. Yes, we go through the agent, but our rent goes from my bank account into our landlady's bank account; if we have any problems we have to phone her direct; and on the two occasions she has visited the property she has contacted us herself to arrange, therefore I don't really see how the agents can justify this exorborant charge to people who obviously if they had that much excess money would be buying their own property. If anyone has any comments or advice regarding this matter, it would be appreciated. Many thanks

119
Guest Avatar
phil 15th February, 2012 @ 10:47

The age old 'renewal fee' debate. Here's my two pence worth from my years of experience.

First off, for all those people complaining about being charged a fee they did not know about, it can't be charged unless you agreed to it in your terms of business (contract) with the agent. If you signed a legally binding document without reading it I would seriously question if you have the right mindset to be a landlord. If you do not take your responsibilities seriously you are just adding to a problem within the private rental sector and stand for everything that is wrong with it.

For those who have genuinely been hit with a fee that wasn't within the terms and conditions signed or not clear enough under the OFT (Office of Fair Trade) guidelines then trust in the law and go to them with your complaint.

Do not complain or try to avoid paying something you have agreed to previously, that action is no different to the ruthless agents you are complaining about.

For those that have suggested saying no to renewing a tenancy then doing it anyway without the agent knowing, agents check these things and that leaves you in breach of contract and liable for a court case, go down the correct road if you have a genuine case with the OFT.

There are huge numbers of terrible and unscrupulous agents and landlords out there who paint a dim picture of the industry. If you are prepared to take on the responsibility of being a landlord you should know what you are getting yourself in to.

As a professional landlord you negotiate the renewal fee from day one, you agree to them but at a lower rate from the initial fee. As one poster said, if they didnt stay yo would be paying that fee to find new tenants with the possibility of a void period.

This fee is tax deductable but its clear nearly all of you complaining about paying a renewal fee, you will not be declaring your rental income to the tax man.

Renewal fees are part of the industry you have chosen to be in by being a landlord. You need to be clear on this and deal with it from the offset properly, do the maths and negotiate this. No I don't agree with renewal fees being the same as the initial fee for no work, but yes, you are still receiving rental income from their work so they should receive renumeration as it saves you in the long run and comes off your tax bill anyway if you are abiding by the law.

120
Guest Avatar
charlotte 15th May, 2012 @ 17:33

Honestly most people on this thread want something for nothing. Do you realise how much time an agent spends working on a property for absolutely free? The regsitration, the viewings, the marketing, all of which a fee is only paid if a tenant is found. The agent places that tenant into the property therefore a fee is due for the duration that the tenant is in the property because, without the agent, you would not have that tenant!!

Year by year your renewal fee will decrease however do not kid yourselves that there is no work involved! A negotiation in rent, contracts have to be issued signed and recieved, invoices must be dealt with, and we all know that if you want to re-let your property on the open market that you may not get the same rent as you had previously depending on your area, and it will cost you more in fees.

Please do not pretend to know what agents do day to day, how much work and how much knowledge/work is required.

It's very simple, if you do not like agents, try and rent it privately and see how much time you will waste showing the wrong people round, may end up with a tenant that doesn't have the affordability or the correct references.

121
Guest Avatar
Benji 15th May, 2012 @ 21:24

Charlotte,

Will letting agents be regulated in the very near future?

Do you think renewal fees will still be allowed?

122
Guest Avatar
Phil 28th May, 2012 @ 11:19

Benji,

Good lettings agents are already regulated, something they choose to do.

ARLA (Association of Residential Lettings Agents) is the main one but there are a few.

Nearly all reputable lettings agencies are a member of the Property Ombudsman Scheme and all of these still allow renewal fees.

Renewal fees are simple, for the time the landlord receives a rental income from a tenant found by an agent, the agent is due a fee (which you can negotiate from the offset).

The renewal fee argument has already been tried in court and been upheld (with strict guidelines on them being clear) so yes, these would continue to be allowed.

To all those complaining about these I would suggest declaring your rental income to the Inland Revenue and deducting that fee from your tax or stop complaining as you are breaking the law and taking from a country that is well in need of that tax revenue.

That is no better than the unscrupulous agents that give the industry a bad name.

123
Guest Avatar
Benji 28th May, 2012 @ 15:53

Phil,

I was refering to compulsory regulation and it looks like the writing is on the wall for that. The 2 organisations you mention, ARLA and the Property Ombudsman, are also calling for it.

When it does happen, it seems unlikely renewal fees will escape unscathed.

I can't see what letting agents are worried about, as you say, good agents are already voluntarily regulated.
Although as I'm sure you are also aware, the enforcement powers of those regulating organisations are currently toothless.

124
Guest Avatar
Graham T 5th September, 2012 @ 21:39

@charlotte

"Year by year your renewal fee will decrease...."

My renewal fee is not going down each year... its going up and up and up!!

It was £50 and now its £150!

How is that possible? Ive never had an inspection and no complaints...

125
Guest Avatar
Neil Groves 25th September, 2013 @ 16:59

Hi - wonder if anyone can help me with any advice. I moved into my current property with my ex in June 2011 - the tenancy was under her name as she had already moved in during January 2011. Unfortunately things didn't work out and we split in August 2012, however the tenancy was still in her name. I eventually managed to arrange this to be amended and paid the fees etc required to raise a new tenancy agreement in my name, without argument or fuss. However this is now up for renewal at a wonderful value of £125. Reading through the previous comments etc, it states renewal fees are for marketing, advertising and finding a tenantt - HOWEVER, the letting agent has not had to find a tenant as there was already one living there (Me!) - Does anyone else think that therefore the renewal fee should not be applicable, especially as I can find no mention in the tenancy agreement in regards to this?

126
Guest Avatar
Paul Nash 19th November, 2013 @ 12:17

I have a question that I can't seem to find an answer to on the internet so would really appreciate any advice. I rented my property out this March. I found tenants myself but wanted to go through a letting agent to manage the funds. After nearly nine months and the tenants have always paid on time and are happy I've decided I no longer want to use the letting agents, however they're not agreeing to release the tenants and said that I'm bound by the T&Cs. So even though this is my tenant and I stupidly didn't think that I would be tied into the contract in the same way as I would had I not found the tenants, I am still bound by the same rules. The letting agents are not budging. Has anyone been in the same situation or have any advice? It would be greatly appreciated.

Many thanks,

Paul

127
Guest Avatar
phil 19th November, 2013 @ 12:32

If compulsory regulation comes into force I for one welcome it, but please do not be under any illusions that will change renewal fees, the Foxtons ruling was very clear and that is the legal precedent on these fees, rules on ensuring they are clearly set out may be enshrined where they are currently not but that would be as far as it goes.

Paul Nash, what does your agreement with the agent say regarding cancellation of the management agreement as that is all you have with them?

128
Guest Avatar
Jan 9th January, 2014 @ 20:42

Within the past two years, the lettings agents have been collecting rent from my tenants at 8%. I have now found out that my tenants want to stay long term and I am considering collecting the rent myself.

After speaking to the lettings manager, she told me she would drop the rent collection from 8% to 4%. I then asked her what would happen if I collected the rent myself. Her answer was £600 plus VAT!

I would like to know if anyone else has had this experience and what did you do??

Many thanks
J

129
Guest Avatar
Anne 26th February, 2014 @ 09:58

Hi,
I'm renewing my tenancy. Same price, just an extention. My tenancy agreement states that I have "to pay the agend £69.60 including VAT towards the cost of any renawal document created for any extension of the Tenancy". The agency is asking 84£ because the price is increased this year, but nobody notified me this change in any form (written or oral) during the past months and during the negotiation period (just 5 minutes, because I managed directly with the landlord renawal agreement.

I'm a foreign, so I don't know English laws.
Please, can you help me?
Regards

130
Guest Avatar
Raj 26th February, 2014 @ 21:29

I have a question- I signed up with a letting agent last year who for a fixed percentage agreed to a fully managed service. This included visits to the property as well as rent collection etc. The year is almost up and it has asked me what service i want for the coming year- fully managed for £100 pm or let only for £50pm. It appears that these are the only two options.

My concerns are that having checked with the tenant the agent has made no visits to the property to date (10 months). As such I cannot see what it has done to justify the fee last year compared to let only.

I also struck out the clauses on renewal fees in the contract which I signed with the letting agent and I returned to it which it accepted (probably didn't check this out itself). As such do you think I can simply tell them to sling their hook re renewal fees.

131
Guest Avatar
Robert Fitzgerald 23rd April, 2014 @ 14:14

An issue has just arisen with a prospective new tenant.

Agent A was letting my property after the previous tenants moved out. Having had no success in finding a tenant I approached a second agent. The second agent found a tenant straight away.

When I mentioned this to Agent A they said fine unless the tenant was Mr. X which it turned out it was. They said that they had shown Mr X. around the property twice but had not arranged an agreement with him as he had not exchanged contracts on the SALE of his house.

They are now saying that they are entitled to their introduction fee, I did point out to them that I had had no knowledge of them showing Mr X the property or I would not have used Agent B. The only reason I used Agent B was becasue Agent A had not been able to find a client....... whereas it appears they had but had not told ne about it.

Does anyone have any advice?

132
Guest Avatar
Johnathan 13th May, 2014 @ 21:38

amazing how many people do not read their contracts then complain later about renewal fees. Its your own fault and you signed a contract. It's quite simple and I have to explain this to everyone. It just boggles the mind how many people who are wealthy enough to even own a second or investment property can't understand this concept of renewal fees. You would think these people would be business savey enough to comprehend the purpose of the fee. I found and procured a tenant for your property which will produce 1 year of rental income to you. For every month that tenant stays, I deserve a percentage. 99% of the time after the lease is done and the tenant moves in, I receive calls all year long to handle property related items and end up doing more work throughout the year that I did to actually find the tenant initially, yet landlords are so cheap they expect you to make multiple trips to the property and handle all tenant relations for free. MIND BOGGLING

133
Guest Avatar
bharma 19th May, 2014 @ 10:13

As a reputable ARLA licensed agent, I really do object to constantly being told that we don't do any extra work for renewals.. this is simply not the case. There is in fact hours of work involved in renegotiating terms, drawing up arrangement's, they take weeks to chase back as tenants and landlords are understandably more laid back about getting these documents signed than the initial tenancy agreement at move in.

We have to rewrite them, contrary to popular belief, we do not simply copy and paste, there is a whole heap of new legislation that now has to be included, registering of the TDS, we have to re issue the TDS information, set up new standing orders in most cases, date and execute the agreements, re issue stamp duty information again.. plus updating the system, memos to accounts etc etc

I start a renewal 3 months before the end of the tenancy and very rarely is everything complete by the expiry date. The paperwork updates and grows year on year and new legislation and schemes are brought out.. all btw to protect tenants.

Regulate agents, so that every Jo Bloggs can't just come along and open one..

My colleges and friends who are estate agents work very hard and really care about what they do.

This agent wrote an interesting article about what agents actually do for their fee
http://www.concentriclettings.co.uk/about-us/news/should-agents-charge-tenants-fees/

Have a good week all

134
Guest Avatar
Lenny Victor 2nd June, 2014 @ 16:04

Some of the comments here, especially by letting agents, are plain nonsense, and have no lawful basis whatsoever. Let's go back to the beginning and examine the relationship between the parties:

One agent claims the tenant is "my client". Not so. The agent represents the LANDLORD, who engages the agent to find a suitable tenant. The agent CANNOT fairly represent both Landlord and Tenant at the same time (unless he is a notary and even then it is doubtful). The reason is simple: conflict of interest. Landlords are being systematically ripped off, but so are tenants, and with zero choice.

When a tenant walks into a letting agency, he is NOT engaging the agents's services, just as a buyer is not contracting with the Estate Agent, who works solely for the SELLER. Therefore any fee charged to the tenant is strictly speaking unenforceable, save for REASONABLE expenses at best. Unfortunately no-one with enough cash to risk has properly challenged this in the courts, but it is only a matter of time before the wretched agents are outlawed, as they have been in Scotland.

The moment a letting agent attempts to charge a tenant, he is establishing a fiduciary relationship with that tenant, and owes him a duty of care, but that cannot be because the agent does not act in the tenant's interest, but that of the landlord. He most certainly does not act in the interests of both, and arguably acts for neither given the exhorbitant charges levied on both.

In Scotland this has been recognised as both exploitative and absurd, which is why letting agents are now banned in Scotland from charging the tenant anything at all, except a deposit on behalf of the landlord.

99% of UK agents charge outrageous fees on both parties. A credit reference can be had for £2. The agent charges as much as £100 for this...pure scam. The agents typically also charge tenants merely for registering, which they fail to return even if the lease is rejected by the tenant for perfectly legitimate reasons. This is appalling exploitation and there is a solid case here of unfair terms and conditions, and imbalance in rights of parties which OFT should REALLY be addressing but has utterly failed to, despite this being clearly a breach of OFT rules.

Similarly the ICO has sided entirely on the landlords in allowing them to snoop and research on the tenant's personal data while denying the tenant the right to reference the landlord (some of whom have no right to let or are behind with mortgages, or for that matter the agent, who is entirely unqualified and unregulated (see below).

The whole business stinks. Where honest and decent landlords are operating, they too are conned into paying renewal fees (a quick photo copy of the previous lease) for absolutely no work in return by these work shy spivs.

My advice to both tenants and landlords: Cut out these ghastly con-men and go it alone. It is possible to get decent references on both sides using old fashioned methods which were perfectly sound before the current method used by agencies.

Furthermore, I cannot see any lawful basis on which an agent can lawfully fleece both tenant and landlord at the same time. The courts will be aware of the rank exploitation by these two-timing agents who simply cannot be on both sides at once. Doing so means they have a fundamental conflict of care and duty to both parties at once and that is impossible. This needs to be challenged by a good hearted lawyer (if that is possible) with flawless knowledge of agency law, OFT regulations and landlord and tenant legislation.

The only reason these slime ball agents are allowed to exist is because former housing minister Grant Shapps (aka Michael Green, the get rich quick scam artist and google rule buster) deemed the letting agency business to be healthy and not in need of regulating, in contrast to the Scots who quite rightly begged to differ.

By the way ARLA is NOT a regulator. It is a vested interest agents' association and has about as much regulatory clout as a bucket of dish water.

Landlords: please cut out the spivs and save a fortune. Tenants, give these lazy good for nothings the contempt they deserve. Letting agents are a complete con and should be avoided. Avoiding them en masse will close 'em down soon enough!

135
Guest Avatar
Jamie 11th June, 2014 @ 07:15

Our agent has just emailed us 3 months before the tenancy has ended to tell us it will be £90 to renew! Our LL has handled everything since we moved in but the LA have told us we need to pay them then money to send out new contracts. Outrageous!

136
Guest Avatar
andrea smith 19th June, 2014 @ 14:40

My contract with my property management is due to expire in 2015 and I have advised that I would not wish to renew this, however I like my Tennant's so requested to take over the management myself. They have advised that as long as the Tennant's live in the property regardless if the contract is in place they have the right to request a management fee until the Tennant's vacate is this correct.

137
Guest Avatar
cardifflandlord 19th June, 2014 @ 15:12

Hey Andrea,

I'd say it depends on the wording of the contract you signed. If it was there and you did not read it or signed it without understanding it then that's down to you i'm afraid and they probably have the right to the payment.

HOWEVER, it is highly likely that the contract falls under the unfair contract terms legislation for it's unreasonability (why should you pay them for the next 5 years when they do nothing yada yada) so I'd have a chat with a legal professional to let them look at it. Spending a few bob now will save you loads of hassle in the future.

CL

138
Guest Avatar
cardifflandlord 19th June, 2014 @ 15:14

@ Lenny Victor

Bloody well said!

CL

139
Guest Avatar
Hove Tenant 26th June, 2014 @ 20:22

My letting agents are asking for £60 admin fee, just to to allow me continue to stay on a periodic tenancy. Not even a renewal! So, in effect, they are asking me to pay a fee for doing, not only hardly anything...... but actually....NOTHING!

Their first letter was little threatening with CAPITALS. They asked me to confirm that I wanted to stay and then pay the £60, otherwise be aware that i must give notice in writing. It made it sound that I would have to leave if i didn't pay. The 2nd letter was little less threatening, but still asking me to confirm I wanted to stay, so that then they could charge me admin fee for periodic tenancy at end of tenancy.

Can they charge me this fee for this? I signed a 6 month contract in mid jan 2014 and have paid my rent on time.

140
Guest Avatar
WaterTiger 19th July, 2014 @ 09:15

The law of averages suggests that there must be some decent agents around — mustn’t there? — but most of them seem to be the kinds of slimy, money-grubbing sh*ts you’d expect without any imposed ethical framework or regulation of their activities.

I bought my first house complete with (utterly brilliant) tenant about two years ago. My parents had owned a couple of houses for a while and had been very badly stung by agents who took fees, but did naff all. (Have you heard the one about the longstanding tenant who died and it turned out his son had been living in the property for over ten years without the agent noticing, so had the right to remain on a regulated tenancy? The solicitor said it probably wasn’t worth suing the agents as they were a nationwide company with much firepower…)

I was determined not to have an agent, although the agent used by the vendors of my first house tried very hard — including, I discovered later, putting no little pressure on the tenant to try to persuade me (seriously!) — to make me keep him on. I quickly worked out why he was so keen. It turned out that he had not only been charging the owner agency fees, but he had been charging the tenant SEVENTY POUNDS TWICE A YEAR to ‘renew’ a standard assured shorthold tenancy — and to add insult to injury, he even made her (she doesn’t drive) go to his office to pay!

Anyway, @Hove Tenant, I don’t KNOW, but I really think it probably is not legal, especially if it wasn’t mentioned to you at the outset. Check your copies of all paperwork: did you accidentally sign something saying you’d pay to have the contract renewed? As I understand it, as long as the owner and tenant have no issues to iron out, the terms of the contract remain in force until one or other party gives notice.

Shelter says that ‘If your fixed term has ended, your tenancy will become a periodic tenancy (and will run from month to month or week to week)’, which seems straightforward (except that ‘if your tenancy is periodic or if the fixed-term has come to an end, your landlord can evict you fairly easily. There is no need for your landlord to give a reason to the court but they must be able to show that you have an assured shorthold tenancy and that the correct notice has been served’).*

Information on Landlord-Law Blog** on this very subject suggests that the agency can’t do this legally: ‘It is a tenant’s right to stay on in a property after the fixed term has ended (s5 Housing Act 1988). Any tenancy agreement term which prohibits this (if it exists, check your tenancy) will almost certainly be considered ‘unfair’ under the Unfair Terms in Consumer Contracts Regulations 1999.’ (This page also refers to a campaign by Shelter that might be worth investigating.)

There’s probably further information online, and you might also check with Citizens Advice or similar. Do let us know how you get on!

* http://england.shelter.org.uk/get_advice/private_renting/private_renting_agreements/assured_shorthold_tenancies
** http://www.landlordlawblog.co.uk/2013/07/24/can-letting-agents-insist-on-a-new-fixed-term-rather-than-a-periodic-tenancy/

141
Guest Avatar
landlordpete 24th August, 2014 @ 12:51

So many comments - but perhaps they can be summarised as:

Landlord: "I signed something which I either didn't read or understand, and now rather than admit to my own stupidity I think I have a right to blame someone else. Yes I know when I was looking for an agent there were others who are long established, regulated, qualified and have an independent redress scheme, client monies insurance, etc, but I saw that I could save a few quid by going to the cheapest'

So how about another thread along the lines of:

Landlord: "my tenant signed a tenancy agreement and they are now saying that although the issue that they are raising is written in the agreement they signed, they don't wish to abide by the terms as they claim they never read them properly. This is totally unfair, outrageous in fact and all tenants are therefore scumbags. I'm an honest landlord, honest guv. Qualifications, training, redress scheme? no, I don't have any of those because I'm an expert and tenants should just do what I tell them'

142
Guest Avatar
Jamie 24th August, 2014 @ 16:24

@Landlordpete Landlord's like you are a disgrace. You say you are a good honest guy, but you are charging people through the nose to pay your mortgage. I earn a very good wage and do not have a hope in hell of affording a house in London. All because of selfish landlords like yourself. You should be ashamed.

143
Guest Avatar
landlordpete 24th August, 2014 @ 17:45

Jamie, you don't seem to be able to read.

I was pointing out the fact that, whether you are a landlord or tenant, you are entering into a legally binding contract, the terms of which you should read and understand, or ask for clarification, or take them to someone who can explain, or else not sign it at all.

I could then go one to argue that I have gone from being a tenant to now being a buy to let small business owner with huge borrowings.

I could point out that I have foregone flash cars, large tv's, holidays and other of life's luxuries so that I can establish and grow my small business and climb on to the housing ladder.

I am a small business owner, just like the corner shop who provides you with convenience of food when you want it. I provide a place to rent when people want it.

144
Guest Avatar
Jamie 24th August, 2014 @ 18:10

No Pete, you are just scum. Charging people way above the going rate to live in your crappy apartment.

145

Please leave a comment...

I'm a nobody

I'm a nobody

Landlord

Landlord

Tenant

Tenant

Letting / Estate Agent

Letting / Estate Agent

Legal

Legal

Buyer

Buyer

Developer

Developer

Enthusiast

Enthusiast

Leave a comment

Want FREE Landlord/Tenant advice from experienced Landlords?

Join our active Landlord community by registering to our Landlord Forum.
Learn, share and resolve your problems!