Letting agent charging 'renewal fee' for periodic tenancy

Limiting_Factor

I'm current on an assured shorthold tenancy. In March, when it expires, I'll be transitioning to a statutory periodic tenancy. I know this happens by default, and doesn't require any work from the letting agent, but they're trying to charge me a £100 'renewal fee'.

There's a clause in my tenancy agreement saying this would happen, but unfortunately at the time I didn't really understand that the clause said they could charge me for doing nothing. The clause says:

“Should the tenancy be renewed or revert to a periodic tenancy then a renewal fee will be payable which we will advise you of.”

I THINK this is unfair, according to a section of the Office of Fair Trading's guidance on unfair terms in tenancy agreements:

Group 3: Binding consumers while allowing the supplier to
provide no service - paragraph 1(c) of Schedule 2

3.35 Schedule 2, paragraph 1, states that terms may be unfair if they have the
object or effect of: (c) making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose
realisation depends on his own will alone.

3.36 A term that binds tenants to go on paying when services are not provided as agreed is clearly unfair. In principle, it may be acceptable for terms to allow a landlord some flexibility in the performance of duties under the tenancy
agreement if they specify the circumstances in which any contractual
obligations do not have to be fulfilled, but this does not apply where the
circumstances in question are effectively under the control of the landlord.
For example, a term requiring the tenant to pay for services to be provided
by the landlord such as cleaning or gardening after the services were
discontinued would be open to challenge.

since in the case that I revert to periodic tenancy, it allows them to charge me a fee with no binding on them to provide any service whatsoever.

I also had a look at The Property Ombudsman code of practice for residential letting agents (I would link to it but as a new user here I can't).

Clauses 3k and 3j of that look promising, as they say whether a fee is a percentage or a fixed amount the amount should be explicit, but that part of the document SEEMS to be about agreements/contracts between the letting agent and the landlord (though it's not explicit in those two clauses).

Anyway, so far I've let the letting agency know that I think the fee is unfair. What should my next step be? Make a complaint to The Property Ombudsman?

Any help would be appreciated.

Prof_Ligate

You will have a statutory periodic tenancy whether you pay the fee or not and so I would just refuse to pay it. Practically speaking, what can they do?

Its ridiculous to charge you for something that you are entitled to automatically by law.

brians_daughter

My brother experienced this a few years ago, infact was probably more and a lot has changed since then, however, the agent simply took his 'fees' he hadnt paid out of his initial deposit once he vacated the property.

At the end of the day, as i told my brother at the time, an agent needs to look attractive to landlords and not so much so to tenants if the properties they market are of good standard.

The agent my brother was with did this by offering low management fees for landlords but fleecing the tennants with £100 re-sign fees, £250 per applicant credit checks etc.

If you feel it is unfair, speak again to the agent and direct them to the information you have supplied above, they may come round to your way of thinking... if not by all means then take the matter further. I would be interested to hear what they say!


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https://forums.moneysavingexpert.com/discussion/4062775

brians_daughter

Prof_Ligate wrote: »

You will have a statutory periodic tenancy whether you pay the fee or not and so I would just refuse to pay it. Practically speaking, what can they do?

Its ridiculous to charge you for something that you are entitled to automatically by law.

Practically speaking they could serve notice on the tenant, We own a BTL property (admittedly i have little to do with it, oh sorts all that out) I would rather have someone in the property who was commited to the property for a further 6 -12 months rather than someone who could vacate in 30days.

Paul_01

Either sign a new agreement and pay the fee, or take the associated risks of a periodic tenancy agreement and tell the agent to do one.

Prof_Ligate

brians_daughter wrote: »

Practically speaking they could serve notice on the tenant, We own a BTL property (admittedly i have little to do with it, oh sorts all that out) I would rather have someone in the property who was commited to the property for a further 6 -12 months rather than someone who could vacate in 30days.

Then the LL/agent should offer them a new fixed term and charge the fee as per the contract as there is work involved in that and so a small admin fee isn't outrageous or unfair.

However, the OP said they would be transitioning to a statutory periodic. No work for the LL or agent as it operates by law and so there should be no charge.

They can serve a notice whether or not the OP pays the fee.

mart.vader

I went to court last year, with a landlord, who had signed a "lettings only" agreement with a LA, the agreement had a clause for renewal fees, "while the original tenant remained in the property". The first years fees were paid for the letting service and not in dispute, just subsequent years fees.

We claimed in court this was an Unfair Term. as the LA didn't do anything for their fee. However, the judge didn't bother to consider Unfair terms and the court (Clerkenwell Court) upheld the LA's claim for the fees and we had to pay it, and the LA costs.

The LA in question, Christopher Stokes of Enfield, are members of the Property Ombudsman, and the National Assn of Estate Agents, and they display the logo of the OFT on their website, and in their Offices. http://www.christopherstokes.co.uk/

NONE of these bodies wanted to know. The Property Ombudsman replied that we had to go through the LA's complaints procedure. But, the LA brought court proceedings the day after we asked for their complaints procedure. There is no point in using their procedure when it has already been to court. I don't know if the LL even got a reply from the NAEA. The OFT will not take up individual cases.

The only way for the LL to avoid these fees imposed annually by the LA, for providing NO service, is to evict the tenant. The LL has now had to pay a third years fee of £800 to the LA.

In my experience, The Property Ombudsman are useless, and their service is a sham.

brians_daughter

Yes, they would be transitioning to a periodic by default, but i doubt this is what the LA or the LL would ideally want. LA gets no fees, LL doesnt get security of a 6/12 month lease. Ultimately the LA will be asking the tennant to re-sign a new lease.

Speaking as a LL, as already stated I would rather have someone who was committed to the property and would re-sign a lease, therefore we would ask them to vacate if a new term wouldnt be signed. That said, our BTL isnt a typical BTL- we usually get companies renting from us to house staff when at HO for training courses etc rather then actual people or families. So maybe my view isnt a typical one?

mart.vader

brians_daughter wrote: »

Practically speaking they could serve notice on the tenant, We own a BTL property (admittedly i have little to do with it, oh sorts all that out) I would rather have someone in the property who was committed to the property for a further 6 -12 months rather than someone who could vacate in 30 days.

The Letting Agent can't serve notice on the tenant if their fees aren't paid, only the LL can do this, or instruct the LA to do this. If the LL is happy with tenant, why would they do it ?

brians_daughter

mart.vader wrote: »

The Letting Agent can't serve notice on the tenant if their fees aren't paid, only the LL can do this, or instruct the LA to do this. If the LL is happy with tenant, why would they do it ?

No I never said they could. I meant 'they' as in collectively LL will undoubtidly take advice from LA whos version will be 'tenant will not sign new lease, they want to go month by month. We advise you to seriously look at letting us find you new tennants who are commited to your property' LL thinks... 'oh yeah, they're probably right - after all LA is looking after my interests'

If the LL is happy with the tenant then great -but i imagine LA will try and twist the LL arm for their own good/interests of their client (LL) by getting LL to serve notice and find 'longer term' tenants.

All the above is commonplace with a lot of LL's I know.

As i have said twice already - from personal point of view i would not be happy with a tenant who would not commit to the property.

mr_fishbulb

brians_daughter wrote: »

I would rather have someone in the property who was commited to the property for a further 6 -12 months rather than someone who could vacate in 30days.

Even if they had been the perfect tenant? You would gamble that for getting in someone else who couldn't pay, or would smash holes in the wall?