Renewal of Tenancy Agreement

imers

Hi there, sorry if this has been asked before but I have read through some of the literature and still cannot understand my position. I rent a property to corporate tenant through a well known London estate agent (not Foxtons) lol. They found us the client in March 08 and charged us their let only commission of 10%. The tenant stayed on and we asked to sign another agreement in March 09 where they charged the same commission. Renewal is up again and tenant wants to stay on for another year. As the EA are not actually finding the tenant, should I still be liable to pay their commission? If so do you think I would be able to negotiate a lower percentage? Thanks for any help!

princessamy86

It depends what you agreed when you signed your contract. If they are not managing the property for you, then it might be worth investigating if you can get out of the agreement, but it's likely you will have to pay. Have a look at your original contract with the agent and see what it says. Also, could you not get your tenant to sign for longer than a year? That would save on costs. Not sure if this is commercial or residential, can you let us know?

BitterAndTwisted

Redundant post as I believe I was answering a question other than the one the OP was asking. Apologies.

imers

Thanks for the quick reply. Its a residential apartment let out to a tenant through their company.

In the tenancy agreement it states that:
If the tenant exercises their right to renew, they shall enter into a new tenancy agreement in the same terms except -
1) New term is for 12mths till march
2) Two months notice of termination
3) Option to increase rent using UK rental price index.

I do not have the original lettings agreement with the letting agent.
However, I have found another copy of Terms and Conditons from agent in a booklet sent before i took the agreement:

If tenancy is extended or renewed whether negotiated through the agent or not the commission payable is 11% reserved for the remainder of the Tenancy including further extensions or renewals.

However we were given a discount of 1% when we signed the actual lettings agreement.
At the time of signing the agreement, in my stupidity I did not read the contract thoroughly enough and also being my first rental property did not have any expereince.
What do you suggest I should do, if anything?

Thanks!

BitterAndTwisted

Negotiate! If one asketh not one shall not receive

princessamy86

I would speak to the agent. Ask them if there is any chance of cancelling the agreement, and what the costs are for doing that. Also get a copy of your original contract asap, then you can see exactly what you have signed for. If the costs of cancelling your contract with the letting agent are astronomical, you could leave your tenant in there on a periodic contract. That's where the original tenancy term ends and then the contract rolls over on a month by month basis. As this is not renewing the contract, you shouldn't incur costs from the agent but you do need a copy of your contract to double check!

There are far more knowledgable people on here regarding landlord and tenant law and agent's contracts, so hopefully someone will be along shortly to reassure me that what I have said above is right!

Fire_Fox

Why don't you have a copy of the contract you signed with the letting agents? Ask them for a duplicate.

adg1

princessamy86 wrote: »

you could leave your tenant in there on a periodic contract. That's where the original tenancy term ends and then the contract rolls over on a month by month basis. As this is not renewing the contract, you shouldn't incur costs from the agent but you do need a copy of your contract to double check!

If its a company let with the company paying the rent then the Tenant (the COMPANY, even with the individual on the TA) will not welcome a periodic as their employee then has no security of tenure.

Read your initial agreement (lettings Ts and Cs) and see what the notice period is and think about offering it but bear the costs in mind (if there are any). You'll probably find that they will chase you for comms as the tenant is still someone they introduced to the property.

I'd go an sit with the lettings manager of which ever office let your property and negotiate the level of renewal comms they are charging you (is it still at 10%? Foxtons fees drop massively for any renewals so maybe they will be following suit?).

I understand your situation, but think of the quality of tenants you have in your flat. A company let (especially with the Company on the front of the TA) is probably the most secure tenant you can get - the tenant can't default and run away as they will have to answer not only to you but their employer.

I'd be inclined to stick at your tenancy and pay the renewal comms (try to negotiate though) for the following reasons:

1. You will have a new tenant and you won't know anything about them, especially whether they will pay the rent;
2. Company lets are the most sought after type of tenant;
3. You let the property to them three years ago when rents were higher than now so you'd probably end up worse off even after renewal comms;

(4. Why not try use the rent increase clause in the contract to get yourself more money? The agent is there to negotiate better rents for their client (you) on any renewals they are involved in. Utilise them!) Although try not to alienate the tenant you have.

I hope that helps you decision.

princessamy86

Good post from adg, I knew there would be someone who knew more than me.

clutton_2

until we know the terms of your contract - it is very difficult to comment sensibly