Letting agency termination fee

gabster06

Hi everyone

I've been with this management firm for almost 3 years now but now they are demanding a fee when I want to end their management to self-manage. 

From my signed terms: "Should the landlord request to change the level of service from either Full Management or Rent Collect during the initial period or during any subsequent term of the tenancy a fee of 1 months rent + VAT will be applicable."

When I gave notice to terminate, they demanded that fee citing this clause and when I argued I'm terminating the entire agreement and not requesting a service change, they said:

"You are requesting a service change as you are changing from fully managing the property, to managing this entirely yourself and terminating our agreement... However, if you choose to terminate the current tenancy and serve your landlords notice, you will not face a downgrade fee, and we will need to notify your tenants to vacate on this date."

Is this fee actually enforceable given I'm terminating, not downgrading?

Does threatening tenant eviction to collect a fee make this coercive/unlawful?

Is there a way to keep the tenants at the end of tenancy and ditch the agency?

The tenancy runs until the end of September 2025

Any advice appreciated - especially from anyone who's dealt with similar situations.

Been using a property management company for nearly 3 years. Want to start managing my rental myself but they're demanding a large payment.

My contract mentions a penalty if I "change service level during the tenancy period" - one month's rent plus tax.

When I told them I'm ending our arrangement completely, they said this counts as changing service because I'm going from their management to self-management.

Weirdly, they also said if I make my tenants move out instead, there's no charge. They'd handle the eviction process.

Few questions:

Can they really charge for completely ending a business relationship?

Is it normal to suggest kicking out tenants to avoid a penalty?

Anyone found ways around similar situations?

My tenants' lease runs until late September, so I could potentially wait it out and not renew anything.

Looking for advice from anyone who's been through similar property management disputes.

Thanks!

DullGreyGuy

Going from full service to no service does sound like a change in level. 

Ultimately the full contract needs to be reviewed. 

1) Yes, exit fees are common place

2) No idea if its "normal" but as per the below its certainly can be an option

3) see below


Dealt with similar but where I was the tenant. LL asked me to hand in my notice to leave the property because she wanted to takeover managing it directly and offered a years extension with no price increase as the sweetener to play along with her rouse to avoid the exit fees for the agency. 

gabster06

I did ask the tenants if they agree with this change and they said yes. 

The problem with the letting agency is they didn't do anything for me except charge me monthly. Any work done on the house was arranged by me, any issues I had to mostly solve with my own contractors cause theirs are usually 50% more than mine. 

Also tenants complained about the agency so we're both happy to remove them as intermediaries.

Well my question is more about once the tenancy ends can they force me to kick out the tenants? 

DullGreyGuy

gabster06 said:

I did ask the tenants if they agree with this change and they said yes. 

The problem with the letting agency is they didn't do anything for me except charge me monthly. Any work done on the house was arranged by me, any issues I had to mostly solve with my own contractors cause theirs are usually 50% more than mine. 

Also tenants complained about the agency so we're both happy to remove them as intermediaries.

Well my question is more about once the tenancy ends can they force me to kick out the tenants? 

If they got wind that actually the tenants haven't left then they'd probably pursue you for the monies 

As always, the time to negotiate is before signing the contract, once your ink is on it it's all a bit late to find bits you dont like. 

gabster06

The tenancy ends in September and they haven't informed or discussed this with the tenants yet. I know they want to stay because I asked them directly. 

yeah, but there's no clause about once the tenancy ends I have to kick out the tenants so I won't pay that fee. The fee is specifically about the service I use and once the tenancy ends I choose none. 

The fact they're suggesting eviction as the only fee-free option seems like they're trying to force me into paying rather than lose good tenants.

DullGreyGuy

gabster06 said:

The tenancy ends in September and they haven't informed or discussed this with the tenants yet. I know they want to stay because I asked them directly. 

yeah, but there's no clause about once the tenancy ends I have to kick out the tenants so I won't pay that fee. The fee is specifically about the service I use and once the tenancy ends I choose none. 

The fact they're suggesting eviction as the only fee-free option seems like they're trying to force me into paying rather than lose good tenants.

You need to read the whole contract, most the contract continues if the tenancy continues unless you pay the exit fee. 

saajan_12

Yes its fairly commonplace for agents to charge as long as the tenants they found are in situ. If they found problematic tenants or people who wanted to stay short term, they get less but if they find good longterm tenants then theoretically they have done a better job and should get compensated. In practice they probably pick the first people they find, but that's the contract you signed. 

They can't force you to kick the tenants, as your contract with the tenants is presumably bilateral. However if you don't, then the agent can argue the tenancy continued, and so they are owed their monthly commission OR a one off termination fee of 1 months rent. Given they know where your asset is, this could be easily recovered via courts. 

I'd negotiate the amount, but if they don't budge then unfortunately that's the contract you signed.