Statutory periodic tenancy STP + unfair renewal fees

[AKC1980]

Hi everyone, first off thanks for taking the time to read this.

 

I have done some searches on this topic on this forum and other places, but I'm not sure where I stand in regards to the wording on my contract.

 

I'm a LL from London, and getting increasing frustrated with the LA and their renewal fees. Fair enough, I'm a bit silly not have negotiated the contract in the first place, but my tenants are staying on for their third year now, and the renewal fees are nearly £1000, which is ridiculous for the amount of work they are doing (getting a piece of paper signed).

 

So, I'm thinking of letting the contract roll into an STP, I was under the impression that no fees should be charged in this scenario, but in my contract with the LA, the following is worded:

 

"The landlord should be aware that renewal or continuation as a periodic Tenancy is subject to an additional fee plus VAT as shown in Schedule 1 above whether or not we as your Agent negotiate on your behalf. If you prefer to negotiate any renewal personally our fees for the Letting Service will continue to be payable according to Schedule 1 above for the duration of the time the Tenants occupies the premises"

 

Do I have a leg to stand on? Should I seek legal advice? Surely they can't charge me for not actually doing *anything*?!?

 

Once again, thanks for reading this for me, any help is most appreciated.

Edited June 25, 2014 by AKC1980

[BRIGADIER2JCS]

Why not get a tenancy agreement drafted or use the LAs as template.

 

 

I dropped agents 6 years ago, have long term tenants, maintenance /safety checks logged with trusted tradesmen, renewal is seamless.

No Fees/No Hassle/.

 

 

Do you really need an LA was the question in my mind and by experience NO!!

[AKC1980]

Why not get a tenancy agreement drafted or use the LAs as template.

 

 

I dropped agents 6 years ago, have long term tenants, maintenance /safety checks logged with trusted tradesmen, renewal is seamless.

No Fees/No Hassle/.

 

 

Do you really need an LA was the question in my mind and by experience NO!!

 

Thanks for your reply

 

That's definitely my intention, I want to remove the LA from the equation completely as I have formed a good relationship with the tenants.

 

However, I'm just wondering if their fees are enforceable by law if I keep the existing tenants? That's my main concern.

[BRIGADIER2JCS]

Thanks for your reply

 

That's definitely my intention, I want to remove the LA from the equation completely as I have formed a good relationship with the tenants.

 

However, I'm just wondering if their fees are enforceable by law if I keep the existing tenants? That's my main concern.

 

 

LAs fees are a farce imo, just write and formally "dismiss them" any reasonable charges up to cancellation date should be met.

Deposits of course must be properly protected there are a number of excellent firms available.

 

 

The relationship with tenants was one of the reasons for dropping LAs the saving is well worth the little bit of work involved (average 5 hours a year)!!

[AKC1980]

LAs fees are a farce imo, just write and formally "dismiss them" any reasonable charges up to cancellation date should be met.

Deposits of course must be properly protected there are a number of excellent firms available.

 

 

The relationship with tenants was one of the reasons for dropping LAs the saving is well worth the little bit of work involved (average 5 hours a year)!!

 

Thanks for the info... I've mailed them earlier saying that I'd like the tenants to stay on under an SPT, so interested to see what they reply with in regards to fees. I'm a little worried because of how the contract is worded but let's see.

[mariner51]

Typical cancellation Notice for LA is 3 months.

You need to read LA/LL Agreement closely to check for other hidden mines eg can they continue to apply fees for duration of existing T.

One reason why Govt is (rightly) considering legislating on LA fees.

[Steve__M]

It would be useful to know relevant bits from Schedule 1.

 

Looking at this there are two separate bits.

 

The landlord should be aware that renewal or continuation as a periodic Tenancy is subject to an additional fee plus VAT as shown in Schedule 1 above whether or not we as your Agent negotiate on your behalf.

 

First, it sounds like a one-off fee.

 

Secondly, it might be looking (carefully) at the Foxtons case aspects of which may be relevant depending on the circumstance.

 

http://www.landlordlawblog.co.uk/2009/07/15/the-oft-v-foxton-case-commission-on-renewals/

 

If you prefer to negotiate any renewal personally our fees for the Letting Service will continue to be payable according to Schedule 1 above for the duration of the time the Tenants occupies the premises

 

This seems to be about ongoing payments. Are you paying an ongoing management fee, and if so are you intending to continue to do so?

[BRIGADIER2JCS]

The £1000 that you have been quoted is imo beyond fairness/reasonableness there is little to bugger all work involved which is what I told the LA I used, did not pay they did nothing.

[*RainbowTears*]

Did I really read that right?

 

£1000 Renewal fees?? I sure wouldnt pay that, as I agree with Brig thats totally unreasonable, esp for signing a piece of paperwork!!!

 

Blimey I've been in the Rented Sector a very long time & as yet I have never had to pay a Renewal fee!! I don't even have any interaction with the LA unless there's a leak or something....

[AKC1980]

Thanks again guys...

 

- Firstly, the schedule 1 fees, are just fees on renewal, I guess the most relevant part is "In the event that the tenancy continues for a greater period than the original term, whether or not this is arranged by the LA, a fee rate of 6% for let only of the gross rental income for the period of the renewal will apply whether as a fixed term or periodic tenancy and regardless of whether the LA is instructed to act on your behalf. The fee is payable if one or more the tenants found by the LA continues to occupy the property". So my worry is it even says it covers periodic tenancy.

 

- To clarify, it's let only, there is no management etc

 

- Also, I asked them y'day if I could change it to an STP as I'd want the flexibility, and the fees should not apply. This was their reply: "As per your terms the fees are due for the whole time the tenants are in the property. This includes if tenancy goes periodic. If the property goes on a one month rolling basis and the tenants move out after say 2 month we will refund you 10 months"

 

Any thoughts? I want to tell them to wedge it, but I don't want them to take me to court to be honest, but do you think it would come to that? Should I reply saying that the chargers are completely unjust and quote the case?

 

I've had a read through the foxtons case just now, but not entirely sure if it's applicable due to the wording of my agreement? I do however think it's completely unfair for them to charge so much for doing absolutely nothing.

 

Thanks again for the advice, you've all been extremely helpful and I do thoroughly appreciate it.

[BRIGADIER2JCS]

Thanks again guys...

 

- Firstly, the schedule 1 fees, are just fees on renewal, I guess the most relevant part is "In the event that the tenancy continues for a greater period than the original term, whether or not this is arranged by the LA, a fee rate of 6% for let only of the gross rental income for the period of the renewal will apply whether as a fixed term or periodic tenancy and regardless of whether the LA is instructed to act on your behalf. The fee is payable if one or more the tenants found by the LA continues to occupy the property". So my worry is it even says it covers periodic tenancy.

 

 

Unfair contract terms imo the LA is doing nothing to "earn" this money.

Have a look through CPUTR see what to can find that might apply.

 

 

- To clarify, it's let only, there is no management etc

 

- Also, I asked them y'day if I could change it to an STP as I'd want the flexibility, and the fees should not apply. This was their reply: "As per your terms the fees are due for the whole time the tenants are in the property. This includes if tenancy goes periodic. If the property goes on a one month rolling basis and the tenants move out after say 2 month we will refund you 10 months"

 

Any thoughts? I want to tell them to wedge it, but I don't want them to take me to court to be honest, but do you think it would come to that? Should I reply saying that the chargers are completely unjust and quote the case?

 

I've had a read through the foxtons case just now, but not entirely sure if it's applicable due to the wording of my agreement? I do however think it's completely unfair for them to charge so much for doing absolutely nothing.

 

Thanks again for the advice, you've all been extremely helpful and I do thoroughly appreciate it.

 

 

 

 

Take a look through the CPUT Regulations there may be something to help there.

 

 

Very unfair contract term money for doing FA.

[Steve__M]

Have you seen this post which was written after the conclusion of proceedings (I believe the OFT and Foxtons came to some sort of agreement):

 

http://www.landlordlawblog.co.uk/2010/02/23/foxtons-case-concluded-now-is-the-time-for-agents-to-review-their-agency-agreements/

 

As per the above:

 

Was the ongoing 6% made clear to you when you signed up? The above suggests it should have been as clear as the original cost.

How does 6% compare with what you paid for the first year? The above suggests that it should be less.

[AKC1980]

Take a look through the CPUT Regulations there may be something to help there.

 

Very unfair contract term money for doing FA.

 

Thanks again,

 

That link doesn't work for me for some reason (but I can see the preview, so maybe my access is restricted), it just takes me back to the forum home page... Was it a link to the actual legislation?

[AKC1980]

 

As per the above:

 

Was the ongoing 6% made clear to you when you signed up? The above suggests it should have been as clear as the original cost.

How does 6% compare with what you paid for the first year? The above suggests that it should be less.

 

Thank you - will check that link now.

 

Yep, I guess it was made clear in the contract (as per the extracts I've written from my contract) but not verbally or any other way - and it was a reduction on the first year (8%), it's just that in my naivety I guess I didn't take notice of it.

[AKC1980]

Also Steve from that updated link you've sent, interestingly it says that foxtons will limit renewals to two. I wish that was the case with my LA, then I'd gladly pay them off now and have done with them. I even asked if I could pay my way out of the contract, but they're just not playing ball at all.

[Steve__M]

Just having it in the contract would not be good enough.

 

They would need to explain it to you, or it should be as prominent as their other fees in their advertising blurb.

 

PS. Of course they won't play ball - the gravy is leaking out of their train. If you offer them something you may find they are not inclined to sue you. If they sue you the costs should be in small claims territory, and they may not wish to face their risk of losing.

[AKC1980]

Just having it in the contract would not be good enough.

 

They would need to explain it to you, or it should be as prominent as their other fees in their advertising blurb.

 

Hmmmm, thinking about it... Actually I negotiated the fee/renewal down when we were doing it. Don't think that'll bode well then :/

 

Do you think I should seek some legal advice? And can anyone here recommend a good lawyer with this kind of experience?

[*RainbowTears*]

When you signed up to the LA to let your house, did you sign a contract with them to say how long a term it would run for?

 

If so how long has your contract with the actual LA got to left to run?

 

I'm asking as my last LL had signed up his house to a 3 year contract to our LA. This was a "managed contract" so the LL had to nothing to do apart from collect his rent from them.

 

The LA for "managing his house" got over £200 a month out of our rent money for doing bugger all!!

[AKC1980]

When you signed up to the LA to let your house, did you sign a contract with them to say how long a term it would run for?

 

If so how long has your contract with the actual LA got to left to run?

 

I'm asking as my last LL had signed up his house to a 3 year contract to our LA. This was a "managed contract" so the LL had to nothing to do apart from collect his rent from them.

 

The LA for "managing his house" got over £200 a month out of our rent money for doing bugger all!!

 

As far as I can tell, nothing to mention length of contract at all... It just rolls. I'm quite annoyed that I didn't negotiate this to start with, but I'm guessing that they would have bumped up my initial fees if I were to do so anyway.

 

Really considering seeking legal advice, but not quite sure who to approach.

[BRIGADIER2JCS]

As far as I can tell, nothing to mention length of contract at all... It just rolls. I'm quite annoyed that I didn't negotiate this to start with, but I'm guessing that they would have bumped up my initial fees if I were to do so anyway.

 

Really considering seeking legal advice, but not quite sure who to approach.

This really smacks of an unfair contract, fees not fully explained, the "roll over " feature not openly explained, yes legal advice is a good idea.

 

 

I have never come across an agreement so draconian with agencies I have used over the years,(glad though to be free of them now).

[AKC1980]

This really smacks of an unfair contract, fees not fully explained, the "roll over " feature not openly explained, yes legal advice is a good idea.

 

I have never come across an agreement so draconian with agencies I have used over the years,(glad though to be free of them now).

 

Thanks for your input - have just mailed Debenhams Ottoway who posted on one of the foxtons blogs, and said they had experience in recovering renewal fees. To be honest I'm not fussed about recovering the previous years renewal fees, I just want to get of my LA.

[BRIGADIER2JCS]

Thanks for your input - have just mailed Debenhams Ottoway who posted on one of the foxtons blogs, and said they had experience in recovering renewal fees. To be honest I'm not fussed about recovering the previous years renewal fees, I just want to get of my LA.

I think they have great experience in the "unfair terms /contracts area.

May find you a way out of this.

[AKC1980]

I think they have great experience in the "unfair terms /contracts area.

May find you a way out of this.

 

I certainly hope so... Will keep everything updated on here.

 

Everyone on here has been super friendly/helpful so just wanted to say a big thanks to you all

[BRIGADIER2JCS]

I certainly hope so... Will keep everything updated on here

 

 

 

 

 

 

 

 

You are most welcome! Happy to help.