Renewal Fee

[latvia3]

A relative of mine has a flat that she has been renting out to the same tenant for the past nine years.

 

The agent for the past seven years was taking 7% commission every year for the renewal.

 

After some advice she stopped issuing AST's and changed them to a periodic tenancy agreement and paid the agent £400.

 

Now the tenant wants to stay another year, the contract is just going to roll on but the estate agent has sent a bill for £400 again.

 

I cannot find anything in the original AST regarding renewal fees only a Renewal Memorandum that does not state anything about renewal rates or fees and a copy of signed section 21 by them.

 

Should she pay the fee, seems a bit high after nine years and no new contract?

 

Many Thanks

[Steve__M]

The fees would not be described in the AST as the AST is a contract between landlord and tenant.

 

The fees would be described in the separate contract that the landlord has with the agent. Ask for a copy if you don't have it.

 

Also check this thread about an ongoing Foxton's case:

 

http://www.consumeractiongroup.co.uk/forum/residential-commercial-lettings/192799-oft-foxtons-case-update.html

[latvia3]

The fees would not be described in the AST as the AST is a contract between landlord and tenant.

 

The fees would be described in the separate contract that the landlord has with the agent. Ask for a copy if you don't have it.

 

Also check this thread about an ongoing Foxton's case:

 

http://www.consumeractiongroup.co.uk/forum/residential-commercial-lettings/192799-oft-foxtons-case-update.html

Very interesting, thanks

[bankoff]

Hi

 

Suggest you don't pay, the agent is trying it on. If there is not contract to pay this £400, then don't pay. Agents will try anything to make money on LL and TT contracts. If it went to court you would win.

[latvia3]

I have been unable to find any documents with terms of business. I have emailed the MD stating this and that after 9 year and having other properties with them to do something about the renewal fee.

[latvia3]

The estate agent today sent a letter threatening court action:eek:

 

After 9 years the estate agent is not providing a new contract or securing a rent a inrease or has been in contact with the tenant etc...

 

The tenant who is on good terms with me has said that they want to stay but not sure how long, so the agreement is rolling on.(nothing for the estate agent to do)

 

Shall I again write to the estate agent and explain or ignore, the estate agents is behaving in a very forward manner:sad:

 

As always thank you in advance.

[latvia3]

Any ideas chaps on what the best plan of action is, the relative I am assisting is rather elderly and exteremly anxious.

[latvia3]

I sent a letter stating I no longer require the agents services.

 

Just received a response from the estate agent(the actual owner)

 

'Stating that they have not received payment for the renewal and that this payment will constitute the final payment!'

 

Should I now:

 

- Respond stating I do not feel I am liable for payment x,y,z reasons

 

I would prefer not to go court, but feel it is not a fair demand for payment.

 

The foxtons case I imagine would imagine override any agreement(if found), however having spoken to my tenant he is now saying that whilst he has not heard anything from the agent in the past year, he may have recently signed but his wife has not & returned a slip to the agent saying that he wishes to stay another year!

 

Does this change my position?

 

Please help....

[Steve__M]

Write asking for a copy of the terms of business that you signed. Say that unless they can provide them you do not feel their claim is valid. They really wouldn't win in court unless they had the contract.

 

If they do produce a contract, then maybe write again suggesting that they await the outcome of the Foxton's case. State that should they proceed, you will apply to have the case to put on hold till the Foxton's case is heard, and will ask the court to order that the agency pays the costs of the application should you win.

 

I'm not a lawyer.

[latvia3]

Hi Steve,

 

My understanding of the OFT vs Foxton case was the agent had to have done something for the renewal fee?

[Steve__M]

Yes, I believe the agent would have to do something for the landlady to earn the fee.

 

The results of the Foxton's appeal of the original decision is due out later to day!

[latvia3]

Oh really?

 

Found a renewal memorandum signed by my relative agreeing to the renewal.

 

Both tenants have not agreed to stay but apparently this is more for the introduction.

 

The estate agent has agreed that this is the final payment.

[yourbank]

The Office of Fair Trading v Foxtons Ltd [2009] EWHC 1681 (Ch) (10 July 2009)

[latvia3]

no precedent set yet

[luketharrison]

The enforceability of Renewal and Sales Commissions in letting agent’s terms and conditions of business in light of Office of Fair Trading (OFT) -v- Foxtons Ltd

The recent High Court decision of OFT -v- Foxtons will have wide ranging ramifications for both letting agents and consumer landlords. Whilst Longmore LJ made it clear in this Judgment that he was not making a decision on the enforceability of Renewal Fees and Sales Commissions per se the practices and terms and conditions operated by Foxtons are similar to terms operated by letting agents up and down the country.

Consumer landlords

The case was decided on the basis of the Unfair Terms in Consumer Contracts Regulations 1999 which apply to consumer landlords only. The Court did not expressly define consumer landlords although Foxtons accepted the definition offered by the OFT namely that a consumer landlord included those that let out their properties when temporarily travelling abroad, due to relocation, through lifestyle choices, to fund part of their mortgage or individuals for whom property represents part of their pension or long terms savings. The Regulations do not apply to “professional” or “commercial” landlords.

Renewal Fees and Sales Commissions are not part of the core bargain

Foxtons failed in their argument that Renewal and Sales Commissions were exempt from scrutiny under the Regulations as the fees formed part of their core charges. The Court decided that in order to form part of the core charges they would have to be seen as such by both Foxtons and the typical consumer landlord at the time the contract was made. The Court also held that Foxtons terms were not in plain and intelligible English which would, in any event, have taken them outside of the exemptions provided for by the Regulations.

Renewal Fees and Sales Commissions held unfair

Having established that the Renewal and Sales Commission charges could be scrutinised under the Regulations on the basis of fairness Longmore LJ had no difficulty in finding the terms to be unfair. He said “The consumer would not expect important obligations of this nature with likely and significant impact to be tucked away in the “small print” only, with no prior flagging, notice or discussion.” He added that the real question was whether the consumer landlord knew what he was paying for when he entered into the contract. Renewal and Sales Commissions should not be “camouflaged”, an “ambush” or “time-bomb!”

Conclusion

As a result of this ruling letting agents will urgently need to review their terms and conditions of business as well as their sales practices.

• Renewal Fees and/or Sales Commission should ideally be expressed as being part of the core charges in both the terms and sales and marketing literature.

• Terms should be in plain and intelligible English.

• Renewal Fees and/or Sales Commission should be expressly flagged and/or brought to the attention of the consumer landlord.

Where lettings agents’ own terms and practices are similar to Foxtons they may have difficulty in recovering their charges based on those fees and may event face claims by consumer landlords for repayment of Renewal fees and Sales Commissions that they have been paid over the last 6 years.

If you are a landlord wanting to claim back Renewal Fees or Sales Commissions that you have paid over the last 6 years please do not hesitate to contact me.

Luke Harrison (Solicitor) in the Litigation/Dispute Resolution department. 01727 837161 [email protected]

[latvia3]

Received a letter from the estate agent. Enclosed a copy of an agreement dated and signed in 2000 stating:

' I have understood and fully agree to all relevant pages of your terms and conditions and I instruct X estate agent to act on my behalf for the purpose of letting my property. I understand payment becomes due should X estate agent be instrumental in introducing a tenant who consequently takes occupation of the property.'

 

Would this apply for renewals? Is so would I still need to see that the tenants have agreed to stay through them?

[Kentish Lass]

No. And I would not pay them another penny in renewal fees - in fact I would be considering taking action to recover the renewal fees for the past 9 years!! 9 x 400 = £3,600 - defnitely worth a chat with a solicitor.

 

You mentioned that they said this was "the final payment" - they obviously know they are on a sticky wicket but are trying to extract the last little bit of bunce. Don't give it to them.

[latvia3]

Hi, it's been more like 7 X 800 & 1 X 400 = £6000 and now another £400. As a matter of principal it just doesn't feel right.

 

My relative is very elderly so doesn't really want to go court, I think I will draft a detailed letter to the managing partner of the estate agent?

[Kentish Lass]

You really should get some legal advice here. I am not sure what you expect to achieve with a letter? Are you going to ask them to refund all the fees they have extracted from you?