Want to end contract with letting agent

AlexButter

Hi, we're having some issues with our letting agent and I need a bit of advice to see whether it's worth paying for a solicitor to get involved. 

When my husband and I decided to buy a house together he already owned a house but it was in negative equity so we had to keep it and rent it out. We used a letting agent who was local and really good but they got bought out a few years ago by a bigger company based in Manchester. We do not make any money from the house (it costs us £4 a month as the difference between the rent we get and the mortgage payments plus £2000 tax this year!) so we would like to sell the house and the tenant has expressed an interest in buying it as he has been in since we first rented it out 8 years ago. Recently we have also been having issues with the letting agent failing to contact us when repairs needed approving and claiming that they had tried phoning us everyday for a month (not true). They have also used shoddy contractors who did such a poor job that that one of the repairs that now needs doing is as a direct result of their actions. 

Originally the tenant was on a 12 month tenancy but they charged us an extortionate renewal fee each year so we just put it on a rolling contract. Due to all the recent issues we've been having with them and the fact that we are looking to sell in the next 6 months I told them that I wanted to end our contract with them. Their response was 
"Under the full property management, once a tenancy has been created the agreement cannot be terminated until the end of the term of the tenancy. The agreement cannot be terminated whilst the tenant is in situ. " So my question is, is this true and common? If our agreement was with another original company, is this still binding and what can we do to get rid of them and manage the property ourselves, cutting out the incompetent, expensive middleman until we can sell?

Thanks in advance for any help you can offer.

Bossypants

What does your contract say?

AlexButter

She claims she quoted that from the contract but our original one was with a different company. My husband sorted it all out at the time and he can't find the original one!

Bossypants

Ask her to provide a copy?
Having said that, if you intend to sell to the tenant within six months, it might be easier to just keep them on and save yourselves the headache of trying to extricate yourselves ahead of time.

greatcrested

You and they are bound by the terms of the original contract. Get it out and read it, or ask for a copy. (Can't believe you don't have a copy....!)

You may find that if you sell to the tenants, who were introduced to you by the letting agent, you have to pay the agent an introduction fee (just like selling via an estate agent), though I vaguely recall something about that being banned. Someone else may know.

I agree that if you will be selling within months, the potential agro of trying to end the contract with the letting agent will not be worth it.

The followng may also be helpful:

SACKING A LETTING AGENT

Sometimes landlords decide they no longer wish to use their letting agent. This may be to save the fee, or because they are unhappy with the service, or for other reasons. How, when and at what cost they can do so depends primarily on the contract they signed with the agent, so before doing anything, read the agent contract (not the tenancy agreement).

Usually notice is required (2 months? 4?). Often there is a clause requiring on-going fees if a tenant the agent introduced remains in the property. There may be other conditions.

The 2009 case The Office of Fair Trading Vs Foxtons Ltd in the High Court (which sets a precedent that must be followed by County Courts) ruled that a clause hidden in small print requiring on-going fees was unfair and unenforceable.

However, in any dispute over fees, remember the old adage "possession is 9/10ths of the law". You do not want to be in a position where you are trying to claim back from them rent they hold. Far better if they have none of your money, and they have to claim their fees from you.

So:
1) decide if you're going to employ a new agent, or self-manage
2) select a new agent if appropriate
3) talk to your tenant so they understand what's going on. Ideally face-to-face. Reassure them this will not affect them negatively. Reassure them their deposit is still safe. Explain future rent payment process.
4) Instruct new agent if appropriate, and agree a start date
5) WRITE to your tenants, formally confirming your chat. Instruct them (yes, INSTRUCT - you are their landlord)
a) who/how to pay future rent;
b) starting when;
c) who/how to contact with issues (repairs etc);
d) give them a new address "for the serving of notices" (LL & Tenant Act 1987)
6) Wait till the next rent payment date has passed and you've received the tenant's 1st rent payment direct (or via new agent)
7) Only then, give the old agent the required notice, in WRITING. By this point, hopefully, they have none of the tenant's rent and thus owe you nothing.
8) Your letter should also instruct them to pass you
* the(original) tenancy agreement(s), references, correspondence, inventory, gas certificates, inspection reports, Right To Rent & other documentation
* a final account, and balance of any funds they hold (hopefully £0)
* details of the tenant's deposit (this needs to be transferred into your/new agents name with the scheme holding it)
* dates the EPC, gov leaflet, Gas report etc were provided to tenants

8) check their final account. You'll need to pay their fee for the duration of the notice period whatever it is, but that can be balanced against any rent/other funds they hold of yours

If you live abroad:
If you are abroad and the tenant pays rent direct to you (as opposed to paying an agent who is in UK), then the tenants may have to deduct your tax before paying the rent. HMRC can chase the tenants for this. See HMRC (Non Resident Landlord Scheme).

You will also need arrangements in place to deal with repairs, gas inspections etc. if you are abroad. You can't expect the tenants to email you, and hope you respond, and by law the tenants must have an address in England or Wales "for the serving of notices" on you.