Letting Agent Retaining Excess Fee For Future Let - Is This Legal!?

[EViS]

I am the Landlord at the property in question. At the start of the Tenancy, my Letting Agent (a very large organisation) took an upfront percentage fee of 18 months let for the Tenants that moved in.

 

My Tenants are moving out after 12 months (break clause in Agreement). However, the Letting Agent refuses to refund me the fee for the remaining 6 months that the Tenants are not living there.

 

Instead, the Letting Agent tells me that the fee will be credited to my account with them and put towards future lets or a sale. However, I am not planning on letting out the property again (for at least a couple of years), and neither am I planning on selling it.

 

Hence, do they have the legal right to retain my money in this way!?

[Planner]

What does your contract with the letting agents specify?

[EViS]

Apologies for the delay in replying, the Contract with the Letting Agent states the following:

 

In the event that the Tenancy Agreement is terminated before its full term the Company shall refund to the Landlord by way of a credit, a pro rata proportion of the fee based on the whole number of months remaining, subject to providing for the minimum fee of 75% of the original fee whichever is greater

 

[...]

 

Payment of the said refund is conditional upon the Landlord making the Property available to the Company for re-letting. The said refund is not payable if the Tenancy Agreement is terminated by the Landlord's exercise of the break-clause therein or if the Landlord has not complied with the terms of the Tenancy Agreement.

 

The final paragraph is interesting, for your information the Tenants requested to end their Tenancy and I agreed.

[Steve__M]

If the break clause did not require your agreement then I guess your agreement is irrelevant.

 

I suppose the agreement is saying that agent will let the property for 18 months. If the tenants move out before the 18 months are up, agent retains the option to complete its side of the bargain by replacing tenants rather than giving refund.

 

It's a sneaky clause, and I'll be looking out for it if/when I next use an agent.

[EViS]

Thanks for the reply Steve_M, would appreciate any other views from people as I believe that the above clause is quite unfair and unsure how enforceable it is?

[Kentish Lass]

I am afraid it is in the small print in the first clause you have posted:

 

"shall refund to the landlord by way of a credit"

 

this is exactly what they have done.

 

I must say - I would never let to a tenant for the first time for more than 6 months initially - I would certainly not pay any agency 18 months up front - in fact I would not pay agency fees upfront in this manner at all. They are such sharks and the bigger they are the sharper the teeth. They should deduct their percentage from the monthly rental.

 

Wouldn't it be great if letting agents were regulated!!!

[EViS]

Not great news then, but thanks guys! I have written to the Agent to ask him to confirm by letter the amount that will be credited to my account with them.

 

Should I decide to re-let with the Agent further down the line, would I be in a position to refuse another 18 month contract (i.e. pay the Agent for an additional 12 months fee) and instead request a 6 month contract? My thinking behind this is that if after 6 months my Tenants move out, the Agent no longer owes me anything, however if the Tenant remains in the property for 12 months, I will then pay the Agent's fee pro-rata for those additional 6 months.

 

Can they refuse to commit to a 6 month contract and keep my 'credit' until I agree to another 18 month contract, basing this on any 'credit' going to future contracts of the same ilk? Would they have a foot to stand on here?

[Wickermran]

It all depends on what your contract says.

 

Personally I would avoid like the plague any agent that takes its commission in advance - this gives them absolutely no incentive to collect rent for the next 18 months.

 

My own agency (student and family lettings in Liverpool) as well as most other agencies take it month by month. Personally I would find another agency!