Tenancy renewal fees are "a trap" for landlords
Avoiding “voids”, periods when a property has no tenant, is the number one priority for most buy-to-let landlords - me included.
I’ve been lucky with tenancies - often people renew, one is still in-situ after five years. But having paid an estate agent a large fee (typically 12 per cent of the annual rent) for finding the tenant in the first place (justifiable perhaps), is it right or fair for the agent to charge the same again for merely preparing the renewal contract?
Well, no, according to the Office of Fair Trading (OFT), which last year secured a landmark judgment in the High Court. The ruling was that repeat commission charges buried in the small print of a contract represented “a trap” for landlords.
Agents could have chosen to appeal, like high street banks did over the issue of overdraft charges, but chose not to. Recently the OFT secured a court order against a well-known London agent (Foxtons), which will act as a test case and should make the situation crystal clear for agents and landlords. Renewal fees have to be reasonable and transparent.
Following this victory, the National Landlords Association (NLA) has got the bit between its teeth and wants “money-for-nothing” renewal fees scrapped.
In the past, I’ve occasionally negotiated a lower commission (five or six per cent) for the agent to do the renewal contract. The NLA says a flat fee - perhaps £100 - is appropriate because “it’s a simple, mechanical exercise”.
I’ve been lucky with tenancies - often people renew, one is still in-situ after five years. But having paid an estate agent a large fee (typically 12 per cent of the annual rent) for finding the tenant in the first place (justifiable perhaps), is it right or fair for the agent to charge the same again for merely preparing the renewal contract?
Well, no, according to the Office of Fair Trading (OFT), which last year secured a landmark judgment in the High Court. The ruling was that repeat commission charges buried in the small print of a contract represented “a trap” for landlords.
Agents could have chosen to appeal, like high street banks did over the issue of overdraft charges, but chose not to. Recently the OFT secured a court order against a well-known London agent (Foxtons), which will act as a test case and should make the situation crystal clear for agents and landlords. Renewal fees have to be reasonable and transparent.
Following this victory, the National Landlords Association (NLA) has got the bit between its teeth and wants “money-for-nothing” renewal fees scrapped.
In the past, I’ve occasionally negotiated a lower commission (five or six per cent) for the agent to do the renewal contract. The NLA says a flat fee - perhaps £100 - is appropriate because “it’s a simple, mechanical exercise”.
Agents won’t like it but they may have to bite the bullet. Meanwhile, landlords are urged to check the small print before signing the contract - and don't be afraid to haggle.
To search for property to rent in London, visit http://www.homesandproperty.co.uk/lettings/greater-london.
Regarding your article "Doing the Continental" 7 April 2010.
You state that the legal, surveyors and stamp duty costs on a £500,000 house is £50,000!! !
How do you calculate that!? On the basis of this - please justify to me your position as a property journalist.
Posted by: Paul Pride | 04/09/2010 at 04:27 PM