The way letting agents charge fees is unpopular with landlords, a leading industry expert has said.
For example, landlords dislike renewal fees and some won’t pay. But is it really worth an agent’s while to go to court to get payment, when it takes time and trouble, and the landlord is likely to bad-mouth you to other landlords at the end of it?
In today’s thought-provoking blog, Sarah Rushbrook argues that it is high time agents changed the way they charge.
See if you agree – or disagree.
Comments
@Vossy - ok, so You as agent, would You be able to tell me if this are right actions by agent?: I live in property for around 4 years, we had no renewal of contract, i did not get any new contract either, my friend who is long gone is still on contract, although he gone personally to tell them he is leaving country, new tenants came and when wanted to add them to this address and as so to contract they want charge for amendment of contract, because as they said its stated in contract that charge although i did not see any clausule in it, we actually paid once (long time ago) late and they charged us 20 pounds for late payment although there is nothing stated in contract about it, we didnt receive any notice about unpaid rent prior to payment. bear in mind my long gone friend was still present at their records.
What is Your opinion about it, any suggestions welcome by anyone.
Thank You
I see Kevin Jones beat me to it I was about to respond to Ray Evans request for a legal eagle to clarify.
There are some horrendous comments in this thread in terms of factual and legal error, and they matter.
Kevin is 100% correct. It used to be that the continuous occupancy of the same accommodation on the same terms basically meant you could have a smany agreementsd as you wished but it was one tenancy. Say a new agreement every 6 months for 5 years = 10 agreements but iut was only one tenancy.
This was then clarfied with the introduction in the 1996 Housing Act of the concept of a Replacement Tenancy. This in effect is a renewal but the Law now also treats it as a new tenancy as well as a new agreement, or more correctly agents would be wise to regard it that way. Where a new tenancy as well as a new agreement occurs is where the names of one of the parties changes.
Student tenants one leaves. Matrimonial spliot and just sole name from then on for Landlord OR tenant.
Kevin is also right that effluxion of time (always reminds me of the flx capacitor in Back to the Future films!!) only applies to a Common Law tenancy. Or more correctly any tenancy agreement ended by the service of a Notice to Quit which at strict Law isn't actually necessary.
Couple more comments. I have said elsewhere we make our money out of Landlords long term and tenants short term. Not clear if these grandiose fees - £500????? - relate to tenant find only cases I assume they have to and surely cannot be applied to fully managed ones with a monthly fee anyway?
But even then £500 - for doing what? Sorry Vossy but £500 for doing an inspection visit I'd maybe pay you £50 for and negotiating a rent increase that under Duty of Care you should advise me on anyway - I don't think so. And with a 13(2) so easily and readily available?
GATOK I am afraid you are very wide of the mark in your comments, in fact they are completely the reverse of the true position. My advice would be change where you get any casual advice from and above all the source of any formal training and support you pay for.
Sorry GATOK. An AST doesn't end with the effluction of time - the contract and terms of an AST are very specific. the AST has a fixed part (the assured shorthold part) and then automatically becomes a periodic - this is statute law.
Ray you are correct that a new fixed term is a new tenancy agreement - but it isn't a new tenancy but an extension of the existing one (because the first AST is still in force - see above)
Apart from the legitimacy of charging a fee, there are some scary comments here regarding "rolling over" to a periodic. That just opens up a whole can of legal worms if you have issues with tenants and need them to leave when they dont want to. Any professionally qualified agent would warn a landlord off that as an apparent solution.
Ray's first post is correct. An AST is a fixed term license, and as with any contract it can end with the effluxion of time (i.e. the end date passes). Unless another is created af the exiry date, it will fall out of the AST legislation.
@RFlover
Please read the last sentence of my first post
@Vossey
I do not agree. In my view a 'Renewal' (for £500 under the same original terms and for doing what should be done automatically during any tenancy!) is a new fixed term tenancy. If I am totaly wrong I will accept and apologise. Perhaps a legal eagle will clarify.
@ Ray Evans....just to clarifymy understanding of renewals:-
If one renews an AST with a Renewal Agreement one is, as the term implies, merely renewing the existing tenancy and NOT granting a new tenancy as you state.
Obviously if it is not officially renewed the original AST merely rolls over on a month to month basis, the same terms and conditions apply (as they do on a renewal). Its only the amount of Notice required which changes (Tenant gives 1 month but Landlord has to give 2 months)
To grant a new tenancy the exisitng Tenants will have had to have vacated the property and then returned.
Good points in the article and very good points made by Vossy. We opened 2 years ago and this is how we charge: Let only = fee upfront. Let & manage = both letting and management fees paid monthly. Our renewal fee is a flat fixed rate.
@Ray Evans - yes and let it be periodic so that the tenants can give notice at the worst possible time, like November!
Always worth doing fixed terms so that you plan when it's next available...
I always find the 20% of people that kick up about renewal fees take up 80% of my time, explaining how they are indeed there to motivate us to find half-decent tenants in the first place...
I big point here also;
Don't expect a claw back/ credit if the tenants leave at the break clause if you don't want to pay a renewal fee. It has to bs fair on both sides
That's how I put it anyway. Aswell as achieving a rent increase
We all accept Renewal Fees (RF) are unpopular and the reason for RF can be argued till the cows come home. The same people who object to RF are the same people who say Sales Agents only make a phone call, arrange a viewing and make a sale but they charge ££££`s for this simple task.
We all know this is not the case and many many hours of work go into taking on, marketing and selling a property as well as managing the sale and dealing with issues which arise prior to exchange.
The same for RF - in a nut shell - without them what incentive does an Agent have in providing good quality Tenants who want to rent long term? Without RF it would be in the Agents interest, but not the Clients, to find a Tenant who only wants a 12 month term That way they guarantee getting the porperty back in 12 months and therefore another fee for finding new Tenants.
It may not be very PC but it is how the system works.
I agree that renewal fees should be a fixed rate rather than the same rate or a slight drop. We charge a flat fixed rate of £500 + Vat on all renewals and all our Landlords are happy with this. We also add value to this by inspecting the property and negotiating possible increased rent with the Tenants.
Its all about compromise however there will always be people who will moan and groan..thats life!
With AST's there is no need for a so called 'renewal fee'.
What is it for anyway? A tenency enters into a Periodic at the end of the initial fixed term under the same conditions and if an agent insists on this so-called 'renewal' fee it is a con.. If both parties want the security of another fixed term it becomes a new tenancy - not a 'renewal' and quite rightly incurs a fee.