Charges for ending fixted term rent contract early

stig22

Hi,
I am looking for some advice around charges our estate agent are requesting as we have asked to end our fixed term contract early (due to reduced income as a result of COVID). They have agreed we can leave the property as soon as they find a new tenant and we will be responsible for any landlord costs for finding new tenants and checking them in etc. This is obviously reasonable and we have no issues at all. However they have also asked for a % (11% plus tax) of the letting fee for the remainder of the contract, we still have 11 months remaining (of 24) so this is fairly significant. It is in a contract we signed so I accept we signed up to this however I am questioning if the landlord has agreed we can leave early and we are covering his costs and we have extenuating circumstances is this always applied? The term in the contract reads as below:
"Each case is considered on it's own merits, as a general guidance these costs may include: The letting fee of up to 11% + VAT of the rent from the date of early surrender until the original end date of tenancy".
Before anyone jumps in with "you signed the contract"...I know. I just want to know if there are any circumstances or a way of negotiating given the reason we need to exit the contract is unexpected reduced earnings.
Any help much appreciated.
Thanks

Slithery

You can always try to negotiate, but like any tenancy surrender the LL doesn't have to agree to let you go early at all. You can either accept the conditions that the LL has suggested or remain liable for full rent until the end of the fixed term, it's your choice. Your personal circumstances are irrelevant.

stig22

Thanks for the reply. I think our negotiation would be with the estate agent, it sounds like the LL has agreed we can go as long as costs are covered and rent being paid by new tenants. It's the estate agent requesting the 11%. We have a good relationship with LL we've never given him any issues so we could throw ourselves at his feet and see if he has any leverage with estate agents?

blue_max_3

Wasn't there any break clause? Usually there is a six month one in a twelve month contract. For a two-year one, I would have thought at least a twelve month clause.

stig22

Unfortunately not, we tried to negotiate when we signed the contract but were told we would miss out on the property as others interested who weren't asking for the clause (London rent market is competitive...). I accept I signed the contract so likely will just have to accept the situation as it is. Just interested if anyone has had success negotiating a similar situation. 

greatcrested

stig22 said:

.... We have a good relationship with LL we've never given him any issues so we could throw ourselves at his feet and see if he has any leverage with estate agents?

leverage? Of course he has leverage! Your contract is with the LL, and you and he can agree anything you both wish.

The agent is nothing more than....   an 'agent' acting on behalf of, and on the instructions of, the landlord.

The problem sometimes is that LLs themselves often don't understand this!

stig22

And am I right in thinking if we pay the letting fees for remainder of our agreement the estate agent are just receiving the letting fee twice for no good reason? The landlord will also continue paying them with new tenants in.

greatcrested

It does sound like that yes. I suggest you speak to your landlord.

Sensory

stig22 said:

And am I right in thinking if we pay the letting fees for remainder of our agreement the estate agent are just receiving the letting fee twice for no good reason? The landlord will also continue paying them with new tenants in.

The agent may have charged the landlord the letting fee for your tenancy in full already, and will probably not reimburse the landlord (in the absence of a break clause), but it's entirely up to your landlord what losses they wish to have reimbursed by you.

saajan_12

stig22 said:

Thanks for the reply. I think our negotiation would be with the estate agent, it sounds like the LL has agreed we can go as long as costs are covered and rent being paid by new tenants. It's the estate agent requesting the 11%. We have a good relationship with LL we've never given him any issues so we could throw ourselves at his feet and see if he has any leverage with estate agents?

Legally, your contract is only with the LL, so its the same negotiation. If the LL is happy to terminate in return for 
(a) rent until new tenant moves in; and
(b) cost of readvertising / referencing / setting up new tenant
then that's up to them. 

However the agent may be charging the LL for  11% commision for the remainder of the tenancy and the LL is asking you cover this cost as condition (c) of terminating the tenancy early. You could try arguing to the EA to reduce the commission they charge the LL, but you're not actually party to that agreement. 

Re special case due to the reason you're leaving - no.