Disputing early termination letting fees – advice needed

phe1

We’re being asked to pay over £2k in early termination fees by our letting agent, covering March–October, even though:

• We paid full rent for March.
• A replacement tenant moves in 16 March at a higher rent (£3,200 vs £3,050).
• There will be zero days the property is empty, and the agent will continue to get their management commission.

The agent previously said in an email that the early termination cost would be £292.80/month until a replacement tenant was found, not a full fixed fee through October.

Under the Tenant Fees Act 2019 and the How to Rent Guide, fees can only cover the landlord’s actual financial loss or reasonable costs incurred. Since there’s no vacancy and the rent is higher, it’s unclear how the figure is justified.

We’ve formally disputed the charge and requested:

• A full itemised breakdown of costs
• Evidence of how the charge was calculated
• Confirmation that the agent is not being paid twice for the same period

At this point, we do not accept the fee as payable.

Has anyone been in a similar situation? How did you get agents to reduce/remove early termination fees when a replacement tenant starts immediately?

saajan_12

The agent previously said in an email that the early termination cost would be £292.80/month until a replacement tenant was found, not a full fixed fee through October.

Under the Tenant Fees Act 2019 and the How to Rent Guide, fees can only cover the landlord’s actual financial loss or reasonable costs incurred. Since there’s no vacancy and the rent is higher, it’s unclear how the figure is justified.

..

*Confirmation that the agent is not being paid twice for the same period

Well that's the question, what is the agent's fee which would translate to the LL's actual cost. Beyond vacancies, there is the legwork to advertise, hold viewings, check references, sign contracts, an extra check out, cleaning in between, check in inventory. The agent would charge for this work - often a months rent, but also often a smaller % of the monthly rent with a minimum [ say 12] month term to recover the same amount. So if a tenant moves out mid-term, then the agent may well charge the LL for the rest of the year's fee because their work was already done upfront.

£292.80 = 8% + VAT of the monthly rent, which is about par for tenant find only agents, ie not covering the ongoing property management. That agent fee for 7 months is potentially the LL's actual cost, and is arguably a fairer way to do it than say a flat fee even if there was just 1 month left of your fixed term.

So I think the fee is fair. However:

We paid full rent for March.

A replacement tenant moves in 16 March at a higher rent (£3,200 vs £3,050).

They shouldn't get rent for the same period twice, so they can either get the keys back on 31st March or they can refund the rent for the half of March. Note ordinarily you can't demand partial rent back, but here its their choice to have the new tenant start earlier than what your rent covers. So that's 3050 * / 2 = £1525 refund you're owed.

They can use that £1525 towards the fee and charge you at most the net £500 ish - I'd counter with that.

phe1

@saajan_12

Thanks so much for your input.

However, in our case:

• Replacement tenants start 16 March and will be paying £3,200/month, so the landlord will continue receiving rent immediately.
• Any commission for the agent will also come from the new tenants’ rent, meaning the agent is effectively being paid twice for the same period if we are asked to cover nearly £300 month from March. If we are needing to cover advertising, viewings, references etc then these should be set, billable charges with evidence of how much this costs vs a monthly ONGOING fee when the new tenants rent will cover that? This is what isn't clear.

So our question is: why would we be liable for this monfee when the landlord and agent are already being paid through the new tenancy? It seems inconsistent with the Tenant Fees Act 2019 principle that charges must reflect the landlord’s actual loss or reasonable costs incurred.