This Is How I Helped My Friend Avoid Paying A Tenancy Renewal Fee
Written by The Landlord on 24 May 2010It was only a few weeks ago that I was having a mental ejaculation about how I thought it was unfair that tenants are charged admin fees and renewal fees, so it’s pretty good timing that this whole incident occurred.
Quick reminder of why I believe Tenancy Renewal Fees are unfair
Yes, i’m a broken record, I’ve already said this crap so many times…
The agents already make money for managing the property, and they already charged the landlord a premium to find the tenants! The agent has already been paid a lot of money for their services! They’re not providing any additional services for allowing the same landlord keep the same tenant after the fixed term in the tenant agreement.
In a lot of cases, letting agents charge both landlord and tenant for renewing an agreement. Why? I don’t agree with the fee, but if they’re going to charge renewal fees, why charge both landlord and tenant? It’s like they’re double charging.
Let’s not forget, the labour behind a tenancy renewal…
How A Tenant Avoided Renewal Fees
In this instance, I’m helping my friend, the tenant, avoid the renewal fee. In the past, as a landlord, I also avoided the fee, Avoiding Tenancy Renewal Fees.
My friend’s Tenancy Agreement is approaching the end of the fixed term, but fortunately both he and the landlord are happy for the tenancy to continue as is.
The landlord uses a letting agent to manage the property, so for the tenancy to continue, the agent wanted a new tenancy agreement signed up, which they charged a “tenancy renewal fee” for. I’ve seen some agents charge £90+ for that privilege. What a joke.
Anyways, my friend received this letter from the landlord’s agent…
My friend asked me if there was anyway he could avoid this fee because he also thought it was unjustified. I told him to send them the following email, and see what happens (I was probably more curious than he was):
Hey,
I don’t need any of the terms and conditions in the existing tenancy agreement to change, so I’m for the tenancy to become periodic, avoiding any additional labour.
I’m happy to discuss this directly with the landlord if there are any problems with this arrangement.
Kind regards
As the email clarified, if the tenancy becomes periodic, there’s no extra work required, consequently the agency can’t charge for any labour. It was also important to specify that my friend is happy to discuss this with the landlord, incase the agents try and pull a fast one e.g. completely refuse the idea without even discussing it with the landlord.
The agents responded with something like this:
Hey [insert tenant name],
We’ve discussed this with the Landlord and he is happy for the tenancy become periodic.
Kind regards,
Agent.
Fair play to the agents, they didn’t dismiss the idea, they were cool with it. A lot of agents probably wouldn’t have played ball so easily. Although, I’m not entirely sure if they still charged the landlord a renewal fee. It wouldn’t make much sense if they did.
Yeah, so that’s how it all went down.
A quick reminder of what a periodic tenancy is…
At the end of the term if the tenancy agreement is not renewed, it then becomes what is known as a Statutory Periodic Assured Shorthold Tenancy Agreement. The terms of the original tenancy agreement still apply, but the tenancy continues on an agreed period by period basis.
But, remember…
Some landlords legitimately wouldn’t be happy with the idea of a tenancy becoming periodic, which is completely understandable. Most landlords would prefer securing long-term agreements, so this option may not always be approved by the landlord. Tenants may also want a more long-term arrangement secured on paper, so they can’t be unexpectedly asked to vacate the property. But the advantages of a periodic tenancy is that it offers more flexibility to both landlord and tenant. And if both tenant and landlord are both happy with the agreement, there’s no reason why a periodic agreement couldn’t last for years. The odds are that if the landlord and tenant want the tenany agreement to continue, they’re both happy with one another anyways.
Not all agents charge renewal fees
There are agents that don’t charge tenancy renewal fees, so it maybe worth looking for those rare gems. Some agents are even willing to drop the renewal fee in order to get your custom, but you’ll probably need to haggle and be aware of tenancy renewal fees to start with. If you manage to swing this deal, it’s worth getting it confirmed on paper.
Most of the times the renewal fee clause is burried with in the small print, and often slips the agent’s mind, so you probably won’t hear about it until it’s time to renew. Funny that. So it’s best to always enquire about it if they don’t mention anything.
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16 Comments - join the conversation...
@Samchanproperty - The agent could spend the time more usefully on getting new legitimate business instead of making an easy buck through peoples ignorance!
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One of the first topics mentioned when we where setting up Silhills is how much Landlords where taken for granted.
Personally, I think Agents can actually lose money by charging for a renewed AST. The short term gain of say £100 is nothing in terms of the lost goodwill they suffer.
If the renewed contract also encompassed a further credit, employers check, etc - or there was a re-write of the Terms then that's fair enough but as you say, charging for simply 'pressing copy' is in no way fair.
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I read the advice on this forum and decided to take a different approach. I certainly do not want to switch my agreement to a periodic one. I initially called them and said that I simply could not justify paying this. I confirmed this via email and they emailed me back saying that as a gesture of good will (how kind) they would reduce it by 50%.
I emailed them back,thanking them for their kind offer and informed them that I wanted to renew the tenancy and that I had just placed a signed agreement in the post. I also said it would be appropriate to inform the landlord.
Suffice to say, they waved the whole fee. The point is this. I didn't refuse to renew my agreement. How on earth do they explain that to the landlord? Oh, yes, the tenant has renewed, but because he hasn't paid our blackmail money we won't process it.
Not gonna happen. So my advice is: Be polite, stick to your guns, sign the renewal, don't pay the fee and advise them that if need be, you will write to the landlord personally.
Hope this helps.
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I can provide references, a deposit and a minimum of 2 months advance rent and they want to stitch me up for another 400 quid!
I know these rip off merchants make money from the landlords and even more so if they take control of the management.
Where do they think people like me can raise the additional money from to feed their greed?
If I could wave a magic wand and make these type of agencies go bust over night, I would.
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The paperwork mentioned that the next payment due would be the monthly amount of £650 due on the 4/10/2010.
This was duly paid on time and another one paid on time on the 1/11/2010.
About a 6 weeks ago we had the offer of another 6 months rent at the same price and as far as we aware payable monthly, we signed and sent the paperwork back within the stated 5 days with a covering letter saying we would have preferred a further 12 month lease.
We have been contacted only on 5/11/2010 from the management company
asking us to pay a further 6 months rent in advance or have another set of reference checks (these were on done only 6 months ago) or provide a guarantor.
We feel that this is unacceptable and is “sharp” practice by the management company, it is our thought that this money would be in the account of the management company gaining interest and only paid over to landlord on a monthly basis.
During our short tenancy there has been several problems with maintenance of the property, the most serious being raw sewage leaking under the floor which was only rectified when the local environmental health dept were contacted and the landlords were given notice to repair.
We feel the lack of response was due to the fact we had paid in advance and we are now being penalised for this.
I would like an independent opinion on this.
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However...
I like the picture of the photocopy button, but it's more than that, the agent has to make arrangements for the tenants to sign the copy of the agreement and that can be time consuming when dealing with tenants who ignore calls or are to busy to care. I know from my own experience as a landlord who’s done it myself!
Realistically though, are you trying to tell me that if you were an agent then you wouldn't charge a fee for your time? Think about it! what do you do for a living? do you charge customers for work you do?
What I am saying is try not to be a hypocrite, and try and rationalise like an intelligent human being.
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I'm not saying people shouldn't pay for a service, and I've never said that.
It's the "amount" they charge. It's unjustifiable. The cost to renew a tenancy is typically based on a percentage of the annual rent achieved. How is that fair and taking into consideration the amount of work the agent does to actually create a new tenancy? If it was a justifying fixed-fee like £20-£30, then fine. But it's not.
Moreover, you missed a HUGE point. A lot of agents set it in their contracts so that landlords DON'T have a choice but to pay that fee. If it was a fair deal the landlord would have a choice on whether they want to renew through the agency or get the contracts arranged themselves.
If it's such a drag and hardwork (like you claimed), why do lettings agents FORCE landlords to pay the fee?
I'm not buying into anything you're saying, to be honest. You missed a huge chunk of the important facts.
Realistically, i'd like the choice of whether I want an agent to photocopy a piece of paper and get someone to sign it for £100.
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I recieved this today out of the blue after being a tenant at this property for roughly 2 years :-
Notic of half yearly administration fees
This is to let you know that as from 10 feb 2012 you will be required to pay a half yearly administration fee of £50 for the renewal of your tenancy agreement, these payments will then be due every 6months thereafter.
Enclosed is a copy of the tenants notes on occupation (relevent note has been highlighted).
Collection of this payment has not been enforced previously but due to the current economic climate we now find it necessary to enforce the clause attached.
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Im also currently pretty hard up (due to the "current economic climate") ... i cant see what they are doing to justify this extra cost so im going to try some of the above suggestions (and if anyone else has any advice please let us know here).
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If the above suggestions don't work, try them under the unfair terms and conditions etc act, quoting the 'Office of Fair Trading v Foxtons case'. (Give it a google). Let us know how you get on.
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Thanks for example case there, i was thinking of visiting the office of fair trading on this one anyway. Will let you know how it pans out.
Thanks again,
Chris.
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I initially started this website because I wanted to document my every step from property idiot to property landlord,
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