Let's talk about... Letting Agent Commission

Letting Agents

I have had the misfortune of dealing with Foxtons for almost two years and it feels like I am going through an acrimonious divorce. This week I am now dealing with what I feel is harassment (continued unwanted contact despite saying I do not want to be contacted) about so called renewal fees once the tenancy expires. I feel the agent is quite aggressive. But onto the meat.... Foxtons are trying to charge a renewal fee for what will become a periodic tenancy. I have dispensed with the full management services as both myself and the tenants felt it was well below expected service of a nationwide letting agent of Foxtons standing. We have discussed matters between ourselves without any involvement from Foxtons to do with this matter. In the contract, Foxtons state that the renewal fee needs to be paid up front before the existing AST expires. Firstly, I am unable to understand how you would charge for a periodic tenancy up front unless you have a crystal ball to predict how long it will run (& if you can do that then I feel you are in the wrong industry!). My tenants could opt to stay 5 days or 5 months or 5 years thus making the calculation of a fee for a periodic tenancy unworkable. As this is the case Foxtons state that the renewal will be calculated on the original 2 year AST basis. The agency also states in their contract that the renewal fee is non-refundable so in the case of a stay for less than 24 months in a periodic tenancy there is no clawback for the renewal commission. This would hardly seem fair if they want to quite possibly hammer you for 2 years commission but the tenants may not stay that long. For example, if the tenants only stayed a month then the commission generated would equate to nearly 180% which is far in excess of the original tenancy commission fees paid of 12% plus VAT. This would in effect make the fees paid under the contractual terms unfair and unreasonable. Additionally, there have been several court cases such as Foxtons Ltd Vs Pelkey Bicknall, in which the Office of Trading Standards took part in to discuss the charging of commission on sales. Foxtons lost this case. The underlying concept (as stated by Lord Neuberger) in this case states that the agent needs to be the "effective cause" (i.e. actually do some work) of a commission generation (whether this be in sales or even lettings) and whether it is specifically written or implied in the contract. (There are several other cases which you can find that have had similar results if you search for them.) In my case, the agent has not taken part in any discussion and has not done any work or services with regards to the renewal except try to excessively contact me and ignore my request not to do so. The only work they would do is generate an invoice for effectively an equivalent of 3 months rent which is over £3K. As my boyfriend says "So I could generate you an invoice for renewal commission and do nothing, so I'm not an expert, but that would seem to me to be extortion?" It would appear to me that Foxtons feel if they excessively / aggressively contact the landlord then they will capitulate and fall in with what seems to me unfair terms of business with no effective cause.

I had hoped for a clean break from this agency after my experience of their services and the initial mess that they made of the contract from the start. Unfortunately, they seem determined to drag the agony of dealing with them on for potentially years. If I'm really unlucky this problem could reappear in another years' time if they are continuing to be determined to grind every last penny out of the unfortunate landlord. They have already been paid, in my view, an excessive commission to cover two years of AST contract. I understand that I am not the only landlord who feels this way.

As we now have the potential abolition of fixed term contracts in the government's white paper, I can foresee lettings agents attempt to charge landlords in this manner in the future. Tenants have already had an overhaul of the fees charged by lettings agents. It is high time that fees charged to landlords were revised too.