Tenancy agreements

[MamaR]

Hi, new member here. I would like some advice on how to come out of a contract with a letting agent. The tenancy was for one year, we are coming to the end of the year and the tenant would like to stay. I would like to continue, but without using an agent (as my management fees for the flat have risen considerably, and I am now being charged 1/3 from the monthly rental in total). The agent has said they will charge me one month's rent 'severance fee' plus VAT, I have checked my contract with them and it seems there is no end date - so the contract with them is a separate entity to the tenancy agreement. Although I asked the questions at the time, stating I would run with them for the year and then would like to take on the management myself, they only verbally said that would be fine, to just give them notice. I understood at the time that a severance fee was if I opted to end the tenancy AFTER the 14 days opt out, but BEFORE the end of the 12 months tenancy. It seems I may be stuffed - if I go freelance I pay them £720, if I extend the tenancy for another 12 months I pay an extension fee. Are we really unable to release ourselves from an agent's contract without paying fees? They did well out of me with signing up fees and collecting rent, but this seems the sting in the tail..... and it seems I am locked into this contract forever unless I cough up.

[R0b]

Hello,

Need to see the full terms of the contract. It doesnt sound like you have to pay but it does depend on what is said around termination.

if there is no clause for how you go about termination, then it would be reasonable notice and one month is usually about right. Then again, depending on how it is drafted it could be a fixed contract length and automatically terminate.

Asking someone to tell you what options you have is always going to be difficult if we dont know what your contract says other than your own interpretation of it.

[MamaR]

Hi, new member here. I would like some advice on how to come out of a contract with a letting agent. The tenancy was for one year, we are coming to the end of the year and the tenant would like to stay. I would like to continue, but without using an agent (as my management fees for the flat have risen considerably, and I am now being charged 1/3 from the monthly rental in total). The agent has said they will charge me one month's rent 'severance fee' plus VAT, I have checked my contract with them and it seems there is no end date - so the contract with them is a separate entity to the tenancy agreement. Although I asked the questions at the time, stating I would run with them for the year and then would like to take on the management myself, they only verbally said that would be fine, to just give them notice. I understood at the time that a severance fee was if I opted to end the tenancy AFTER the 14 days opt out, but BEFORE the end of the 12 months tenancy. It seems I may be stuffed - if I go freelance I pay them £720, if I extend the tenancy for another 12 months I pay an extension fee. Are we really unable to release ourselves from an agent's contract without paying fees? They did well out of me with signing up fees and collecting rent, but this seems the sting in the tail..... and it seems I am locked into this contract forever unless I cough up.

Thank you Rob. There are three entries on the TOB which I am trying to navigate. The first, is what I described in my OP as understanding liablility should I end the contract mid tenancy term (I may have misunderstood this, and it may apply at any time, even say after 3 years!): 1 Additional charges: .."if you terminate the contract following a successful letting and the existing tenant remains in the property under a new fixed term agreement directly with you, you agree to pay a fixed charge equivalent to one month's rent +VAT". The second under rights to end the contract: The second refers to How to end the contract: 2 "Tell us you want to end the contract. (write, email or call the branch).. the contract will end immediately once you let us now" then under "What you will need to pay if you end the contract after the 14 day cancellation period has expired refers me back to #1, above. However, the 3rd point 'What happens on expiry of the tenancy?' 3:" We will contact you prior to the expiry of the tenancy and seek your instructions whether you wish to i) terminate the tenancy on expiry ii) extend the exisitng tenancy or iii) grant a new tenancy to the exisitng tenant. If you decide on ii) or iii) we will set out the agreement subject to the charge set out (this refers to the extension fee). So under this section, there is no mention of what happens if I choose #i) to terminate the tenancy. I was hoping I could opt for this one - terminate the tenancy at it's expiry. But am hoping that the clause referring to 1 Additional Charges would only apply if I cancelled within the one-year tenancy agreement. I am fingers crossed I really don't want to fork out another £720 just to keep my tenant, I feel I paid my fees when they marketed the flat and did the necessary work required at that end of the deal. Hope this makes sense!

[R0b]

I'm struggling to read that wall of text, are you able to upload a copy of those terms in full? It will probably be easier for us to scan and review ourselves than providing selective extracts. Contracts do need to be read as a whole and whilst a lot of obligations and consequences are contained in the termination section, that's not always the case and there could be a provision elsewhere that talks about other circumstances where payment is needed.

[MamaR]

Ahh, I have found it! Thank you - uploaded

[R0b]

These terms and conditions are absolutely horrible, either they intended them to be very obscure or whoever drafted them (if a lawyer) is not very good. However, here's my interpretation as best it can be.

Clause 9.3 talks about ending the contract where there is no breach by the letting agency and you've lost your right to change your mind. It says that you can end the contract before the services are completed and then goes on to say that a contract for services is completed when they have finished providing the services and you have paid for them. It then refers to clause 10 on how to end the contract.

I think the first question to consider is, when are the contract for services completed? That will of course depend on the type of service you opted for under Clause 4, but even then it doesn't actually stipulate the length of these services. The contract length might be shown on the "confirmation of marketing form" so it would be best to that first in case it explains the length of the service.

If there's nothing documented on that form, then this is where it gets ambiguous, because the contract of service could be month to month or, it could be for the length of the tenancy contract. Where there is doubt against the meaning, you might be able to rely on what is known as the "Contra Proferentem" rule. It is a legal concept that where a contract or words are ambiguous i.e. that they could be interpreted in more than one way, the courts would construe the meaning against the party who drafted the terms. In other words, your preferred interpretation would be applied, which in this case you could argue month to month.

Now, Clause 10.5 does say that if you end the contract after the 14 day period and they have not been able to complete the contract, then you pay the charges in Clauses 5.3.20 and 5.3.21 (I would read that strictly as both charges are applicable rather than one or the other but you could argue that was not the intention).

If I was arguing this, I would say that if you give notice to the letting agency that you wish the contract to terminate at the end of X month or if you are arguing the contract was for the tenancy period, at the end of the tenancy. That way, you are terminating the contract but not before the services have completed, and I can't see how you can then be charged any fees. Otherwise, any additional charges may be considered a penalty for effective exercising your right to end the services where they have been completed.

All in all, the terms seem very wish washy to me and not abundantly clear on your right to terminate and the courts will not allow one party to be bound to a contract forever as that will most definitely be considered an unfair contract term.

Ultimately it comes down to what you want to do. You can refuse to pay, in which case the terms state the contract does not end until all payments are made, or you can pay up, argue that payment was made under duress and in order to end the contract without incurring further cost and expense, then issue proceedings for the recovery of that amount and also claim restitution too, or any similar claim that you might have against them. Alternatively you could both come to some other mutual agreement.

[MamaR]

Wow! I can't believe you ploughed through all that - thank you.

1. There is no reference to length of service on the 'confirmation of marketing' form, just the date I signed it (one month before the tenancy began).

2. Under Clause 4 I opted for 4.1.6 'Rent Collection Service' which is collected on 1st of each month. Last rent will be collected on 1st May, tenancy ends 31st May.

3. Re Clause 10.5 I agree, I should be able to end the contract at the end of services/tenancy. Which is what I was intending to do, and how I understood the terms after discussion of my reservations with the agent at the time.

5.3.20 refers to cancellation after 14 days 'having accepted a tenant, but prior to grant of the tenancy', the penalty being the fees set out (I interpret as 10% of rental, to the end of tenancy = 12 months, OR 4 months rent +VAT).

Whereas my interpretation of 5.3.21 is what I am finding ambiguous now. I have had a successful letting, I was assuming this section of the clause referred to ending the contract midway, as it feels like a fine/penalty. However, the clause does not state whether this also refers to ending the contract at the end of tenancy (ie at any time, hence why I could still be liable to pay this charge if I wanted to opt out of the contract and my tenant wanted to renew for several years to come) do they have a right to charge me one month's rent+VAT if I have run the duration of the tenancy, on the basis they found the tenant in the first place? (which I paid fees for!)

So, they rang yesterday to tell me my tenant wants to renew for another year. I said want to end the contract to ease expenses as my management (leaseholder) fees have doubled. They have said on the phone 'you can't do that, we are running a business, you will have to pay a months rent +VAT'.

I haven't spoken to them at all since, to clarify the terms, as I wanted some independent advice/clarification first.
I was hoping to feel clearer about my rights before I rang and told them I wish to end the contract.

Overall it seems you feel I cannot end the contract unless I pay the £720. Now you have more detail on services and timescale, what is your feeling? Much appreciated.

[R0b]

I don't think 5.3.20 applies anyway just on the proper reading of it, but I think 5.3.21 is the one in issue. Basically, it seems to me that they can charge you for terminating the contract if the tenants stay on in the property whether under a periodic tenancy or a new fixed term.

Any letting agency contract should set out when the contract starts and how long for (presumably the length of the tenancy) and how much notice needs to be given to end the contract. However, your contract suggests that whatever the term might be deemed, you nevertheless have to pay them one months' rent for terminating the contract, even if the contract for services have been completed i.e. the tenancy. That, on the face of it would appear to look like a penalty charge for ending the contract but I don't know enough about agency contracts to know if this is standard across the board.

So, you can either argue that the clause is unenforceable as it is unfair contract term and not pay them but give the requisite notice to terminate, or pay them and be done with it, or pay but reserve your right to take legal action and look to issue a claim as an unfair contract term.

From the sounds of things, you might be better off just paying the one months' rent + VAT and get rid of them, learn your lesson and check the terms of the contract if you ever use an agent again. If you do pay up, suggest you keep everything in writing and confirm that the payment concludes the agreement with nothing further to pay.

[MamaR]

Thank you Rob - you have given much time to this and I appreciate it. I will try and argue the point that the tenancy has ended and I have honoured it for the full term, also that in discussion with the agent it was implied I could end the contract without penalty. I am practically resolved I will have to cough up, but if anything different occurs through discussion with them it will be a bonus. Overall I do want rid of this, the termination charge plus a year's fees comes to less than a year's fees + extension fee if I stay with them, so I will throw that back as my parting shot! (I need some joy here amidst the lockdown!). Do you want to know the outcome?

[MamaR]

And PS - apologies for the 'wall of text'. I hadn't found the 'post' button and thought it would send if I hit the retun key to make paragraphs. Another lesson learnt.

[MamaR]

And PS - apologies for the 'wall of text'. I hadn't found the 'post' button and thought it would send if I hit the retun key to make paragraphs. Another lesson learnt.