Ending my management contract with my current letting agents

Letting Agents

I’d appreciate some advice as to my next course of action regarding an ongoing issue I am having with my Letting Agents.

My Letting Agents have been managing the letting of my property in London since November 2016 according to a property management agreement that I signed with them at that time. Since then, I have been living seasonally in India for 9 months of the year, returning to live in the UK each summer. However, during the coronavirus pandemic I did not return to the UK for two years so I was completely dependent on my letting agents to source new tenants and manage my property.

The current tenants have been in the property since February 2021. The rent for my property as stated on the Assured Shorthold Tenancy agreement which was sent to me by the letting agents and which exists between the letting agents (as the “Landlord”) and the tenants is £1400 per month, and the letting agent’s fee for managing my property is 10% (£140 per month) — so the monthly rent I have been receiving from the tenants since February 2021 has been £1260.

To cut a very long story short, I have been very unhappy about the way that the letting agents have been managing my property during the last year. These sentiments are shared by the current tenants as they have had problems with the letting agents failing to attend in a timely manner to repairs that were required within the property. This led to the tenants delaying their rent payments to the letting agents back in May 2021, and since that time the rent payments have fallen some 20 days into arrears for reasons that have not been adequately explained to me by the letting agents.

On returning to the UK in September 2021 I was able to meet with the letting agents and the current tenants to try to get to the bottom of the matter. This led to my discovering that the tenant’s rent was being collected each month from the tenants, sometimes in cash and sometimes by electronic bank transfer, by a third party who is an associate of the letting agents and who sourced the current tenants, instead of by the letting agents themselves, and that the rent collected for the first seven months of the tenancy included overpayments of £250 for six months together with an overpayment of £100 for the seventh month in order to account for the tenant’s deposit which does not appear to have been collected by the agents before the tenancy began. I was completely unaware of this arrangement, and it is certainly not something that I would have sanctioned if I had known about it previously. I am currently trying to discover from the letting agents where the tenant’s deposit is currently being held and whether this has been paid into a Tenancy Deposit Scheme, but typically they are dragging their heels with a response which leads me to suspect that the tenant’s deposit has been retained by the said third party. I have also recently discovered that none of the credit or reference checks outlined in the property management agreement as one of the initial obligations of the agent were undertaken by the Letting Agents prior to the tenants taking up their tenancy. This has therefore invalidated the rent guarantee insurance that I have taken out every year on the property on the previous advice of the letting agents that these checks were routinely undertaken, so I unable to make a claim against the current rent arrears.

Previous to the current tenancy, in November 2020, I had a major issue with the Letting Agents upon discovering from my next-door neighbour who found my contact details through social media and contacted me while I was out of the country in India, that my new tenants who had moved into the property that month comprised a party of 12 people who were causing a disturbance to her and other neighbours. My property is a two-bedroom mid terrace house, so clearly this was unacceptable and very likely illegal as my house is not licenced as an HMO. The tenants were also using the garden shed as living accommodation when it is not intended or designed for this purpose. Upon taking this up with the Letting Agents, I discovered that the third party referenced in the previous paragraph above was named on the tenancy agreement as the tenant and had sourced and subletted the property to the people who were in the house without any formal contract between the two parties . Although after I complained to the Letting Agents the third party concerned was able to relocate the tenants in January 2021 and vacant possession was returned to the Agents, this matter ended up causing a great deal of stress both to myself while I was away from the country as well as to my neighbours. Also, although rent was paid to me for both of the months that the subtenants were living in my property, I was left with an outstanding bill for two months’ Council tax amounting to something in the region of £270 despite assurances from the letting agents that this would be paid by the third party. In the event, I ended up paying this outstanding balance out of my own pocket so that I would not receive a fine or incur any interest penalties on the debt.

I would have thought that after this incident, my letting agents would have been keen to make amends with the new tenancy and do everything ‘by the book’, but evidently not. On 4 October 2021 I wrote to the Letting Agents to give the required two months’ notice to end our property management agreement. As the fixed six-month term of the current tenancy agreement ended on 16 August 2021 and was now proceeding on a rolling monthly basis, I also gave the letting agents instruction to serve notice on the current tenants with a view to regaining vacant possession of my property and finding new tenants through another letting agent who I could properly trust with the management of my property. The Letting Agents did not serve the required two months’ notice on the tenants, however, until 14 October 2021 which left me at risk of the possibility of receiving my property back with the tenants still in there. Since then, I have spoken with the tenants and subject to receiving satisfactory credit and reference checks on them and their proposed guarantor which I am now in the process of undertaking myself, I am minded to terminate my agreement with the current letting agents forthwith on the grounds of significant breaches of our property management agreement on their part and to agree a new separate tenancy agreement between me and the tenants with effect from 15 December 2012 (ie the day after the date they have been given notice to leave the property by).

My property management agreement with the letting agents states that “In the event of a significant beach by either party which cannot be remedied then either party is entitled to terminate forthwith”. The agreement goes on to state that “Significant breach” would include the landlord failing to carry out repairs within a reasonable time or otherwise exposing the agent to financial or other risks, and would include the agent not passing on sums he has received to the Landlord.” To my mind, the Letting Agents have been negligent in these areas; and I also regard their failure to undertake the credit and referencing checks on the tenants and collect one month’s rent as a deposit as significant breaches. There have also been examples of other breaches of the contract on their part which while less significant have nevertheless amounted in my mind to a failure to act with reasonable care and skill in performing their contractual obligations, eg failure to inspect the property and report to me on its general condition every three months, allowing my property to be sublet without seeking my permission, consistent failure to pay me rent on time despite having received the funds from the tenants via the third party.

My concern, however, is that the letting agents will not accept this position and will demand to be paid their fees when they discover that I am planning to make a new tenancy agreement separately with the current tenants. I am already owed something in the region of £1200 by