Terminating Agent's Service/Tenancy Renewal

paykanti

Hi,

I, as LL, am coming to the end of my tenancy with my tenants for a 12 month contract which was agreed with an Estate Agent.

Both the tennant and I are happy with renewing for a further 12 months but both are also looking to preferably do so without the agent's involvement.

The tenancy agreement does not seem to contain any relevant clauses but the signed "terms of business" agreement states:

The Landlord may terminate the Agent’s Service by providing the Agent with not less than 1 month’s written notice but termination will only take effect upon any Tenant or Occupant vacating the Property following expiry and/or earlier termination or surrender of the Tenancy. The Agent will be entitled to Fees at the agreed rate from the Landlord in respect of any Tenant or Occupant introduced by them for however long that same Tenant or Occupant remains in the Property whether or not the Agent negotiates the subsequent extensions of the initial term. The Landlord will only be entitled to withdraw from the Agent’s services with the Tenant in situ when the Tenancy is a statutory periodic, in which event the Landlord shall pay the Agent a Withdrawal Fee equivalent to 2 months’ rent at the then current rate together with VAT thereon. Any such notice of termination served by the Landlord is without prejudice to any claim for a breach of contract that either party might have against the other.

As far as I understand, can the tennant and I agree to vacate the property for 1 day after the term of current tenancy and then agree to a new 12 month tenancy without being in contravention of said clause and incurring the Withdrawal Fee? Are there any risks with such an approach?

DullGreyGuy

A while back our landlord at the time wanted rid of the agency and so just got us to write to the agency saying we were ending the tenancy and she then sent us a contract directly to sign. Obviously the risk was all on her had the letting agent worked out we never actually left. 

Who is supposed to do the end of tenancy checks? If its the agent, ours wasn't, then the tenant would have to fully move out, have the inspection done that can be up to a few days after the exit and only after that move back in. Would be a notable cost and hassle for the tenant to help you avoid fees. 

paykanti

Yes, that's something to bear in mind.

The tenant is also being charged some silly monthly fee for a "service" they are looking to break free from too. Just seems a bit wrong (with obvious caveats that we all signed the relevant agreements) that the agent can leave these clauses on after tenancy period expires. I understand they seek compensation for finding the tenant but if that is what this clause is meant to do, they should front-load the charge instead of doing it in this manner.

propertyrental

Is the T really going to vacate? How will you prove the T vacated assuming the agency claimed their withdrawal fee?

Don't forget dealing with the original and new deposit as well as new inventory, and issuing all new documents.

There has been some case law however regarding these long-term tie-ins in LL/agent contracts.

See also

Post 9: Letting agents: how should a landlord select or sack?

The tenant is also being charged some silly monthly fee for a "service" they are looking to break free from too.

What 'silly fee'. This is likely illegal (Tenant Fees Act 2019)

_Penny_Dreadful

paykanti said:

Yes, that's something to bear in mind.

The tenant is also being charged some silly monthly fee for a "service" they are looking to break free from too. Just seems a bit wrong (with obvious caveats that we all signed the relevant agreements) that the agent can leave these clauses on after tenancy period expires. I understand they seek compensation for finding the tenant but if that is what this clause is meant to do, they should front-load the charge instead of doing it in this manner.

If the withdrawal fee were front loaded as you put it then landlords who never withdrew from the contract whilst the tenant was still in-situ would be charge more.

If you only wanted to use the letting agent's services for a 12 months until you found your feet, I'm guessing you're a new landlord, then you should not have signed the contract that you did.  You should have told the letting agent you only wanted to engage them for a 12 month period.

It's rather risky for the tenant to serve notice to legally end the tenancy, move out, and hope you allow them back in the property.  Who registered the deposit, you or the letting agent?  As the tenancy would be ending the tenant's deposit should be returned to them and then you'd need to get it back off the tenant and register it again with this little rouse.  Although I do wonder if the "silly monthly fee" the tenant is paying is for one of those zero deposit schemes.