This is a question to the blog clinic from Stephen, who is a landlord in England.

I am seeking legal advice and support regarding a dispute with my letting agent over an exit fee they are attempting to enforce as part of ending their property management services.

I am a private landlord with only one rental property. Since 2018, the property has been managed by a local estate agent. I’ve had multiple tenants throughout the years and paid all required introductory fees without issue.

The current tenant is on a rolling monthly contract following the expiry of the fixed term. Due to rising costs, I have decided to manage the property myself. However, after requesting a copy of the original 2018 contract, I was surprised to find a clause requiring a 12-month management fee to terminate the agreement, even though:

The tenancy is now periodic. No further service is being provided by the agent. The termination would involve minimal administrative work.

I find these fees excessive and unreasonable. I have tried to negotiate, offering the equivalent of three months’ fees as a compromise, but the agent has been unwilling to engage in a constructive resolution.

My Key Concerns:

The termination clause may be unenforceable under the Consumer Rights Act 2015 and the Unfair Terms in Consumer Contracts Regulations 1999, especially as I am a non-commercial landlord.

Support I Am Seeking:

Legal advice on whether the termination clause is enforceable in this context.
Guidance on my rights under relevant consumer legislation.
Recommendations on how to formally dispute the charge.
Any other guidance and support you may find necessary.

Answer

I agree with you that the termination clause is probably unenforceable under the consumer legislation. 12 months’ notice, where the agents are not actually doing any management work, sounds excessive to me.  There are two courses of action open to you:

1. Refer your complaint to your agents’ property redress scheme

I note that your own negotiations with the agents have not been successful. This means that you can now bring a complaint to your agent’s Property Redress Scheme. All agents should belong to one of the two schemes, failure to do so makes the agency unlawful. The schemes and their websites are:

• The Property Ombudsman (TPO)
• The Property Redress Scheme

Both schemes’ websites have detailed guidance on what you need to do to bring a complaint.  Or you could ring them up and have a word with them.

2. Just write and cancel the agreement

If you don’t want to do this, then you could just write to the agents saying:

• that you wish to terminate the agreement,
• that you will give them 3 months’ notice commission, after which no payments will be made, and
• that you consider their clause requiring 12 months’ notice is unenforceable under the consumer legislation.

Before doing this, you should:

• Ensure that you have obtained all paperwork from the agents (as they may refuse to provide anything once you have given notice) and
• Tell your tenants that your agents have been disinstructed and arrange for all payments of rent to be paid direct to you from now on (if they are not doing this already). If the tenants pay rent to the agents, they will almost certainly withhold it to cover their disputed fees.

I think it is unlikely that the agents will sue you for the disputed agency fees, as they will not want to risk a court claim where a court holds that their clause is unlawful!  But if you are worried about this, the Property Redress Scheme service is the safer option.

Further information

We have a special guide on my Landlord Law site for members, which looks at disputes with letting agents, which goes into a lot more detail, which you can read about here. You would also, as a member, be able to ask me additional questions on our Members Forum.

The post Are these letting agents entitled to insist on a 12 month termination clause? appeared first on The Landlord Law Blog.

Welcome to our weekly Landlord Law Newsround, where we bring you the latest housing news. And there has been no shortage of news this week.

Committee Stage of Renters Rights Bill

As the Renters’ Rights Bill went back to the House of Lords this week there has been a lot of heated discussions this week in the House of Lords with Baroness Scott of Bybrook claiming that the bill does not give equal balance between landlords and tenants, and could reduce rental supply and increase rents for tenants, whilst Baroness of Stevenage responded by saying that it will bring greater stability to tenants.

Baroness Eaton was concerned that it would drive landlords out of the market and this impact vulnerable tenants saying

In reality, landlords will no doubt be more reluctant, under the new burdens placed on them, to take on more vulnerable tenants,  for example, those who enter the market for the first time, without references, and those in receipt of housing benefit.

It will pass to the report stage if the bill passes this committee stage this week.  However, there are a lot of amendments scheduled, so it could take longer.

The HMO Market valued at £78 million

There have been a number of articles this week discussing the importance of the HMO market.  New analysis from HMO management platform COHO highlights that there are an estimated 182,554 HMO properties in England and Wales with the market as a whole valued at £78 million.

We are told that a total of 74% of the 182,554 HMO properties in England and Wales are shared by three or four tenants, while 26% have five or more tenants.  With the largest HMO market being in London (as you would expect).

Vann Vogstad, of COHO, said:

HMOs are a significant force on the national rental market, generating a combined rental total of well over £6billion every year.  But while this sounds like a strong number, HMO landlords are actually leaving a huge amount of money on the table.

Claiming that HMO tenants would pay up to 10% more in rent if their HMO experience were improved.  For example, by ensuring that co tenants are compatible and providing better communication with tenants and a speedy maintenance service.

I would add to this, though, that HMOs are heavily regulated, so landlords looking to enter this lucrative market should undergo legal training first.   We have a huge amount of information on HMOs on Landlord Law, which can help HMO landlords be compliant and avoid penalties and prosecutions.

Are guarantors now the ‘norm’?

Generation Rent is claiming that landlords asking for guarantors is ‘almost the norm’ now. Five years ago, 26% renters were asked for a guarantor compared to 39% of tenants over the last 12 months.  They say that this is an increase of 50%.

This is now becoming so normal, they claim, that it is putting some tenants at a disadvantage.  Guaranatees, they say, should only to be used for ‘those who can source one’ and for those who cannot they should not need to provide one.

Generation Rent are also calling for the the Renters’ Rights Bill to be amended so that it restricts the situations whereby a landlord can ask for a guarantor, such that it can only be asked for if the prospective tenant cannot prove that the rent is affordable to them. They also want those who have been in care to be able to use their council as a guarantor where they struggle to provide guarantors.

I suspect, though, that if landlords are prohibited from asking for guarantees, they will just not let to those tenants.

Student accommodation providers claim government has not listened

A coalition of student accommodation providers, The Student Accredited Private Rental Sector (SAPRS) is claiming that the government risks reducing student housing accommodation, giving uncertainty to students and ‘disrupting a well-functioning rental market’ if the new bill is passed, and calls on the government to act now before it is too late.

The new bill will abolish fixed-term tenancies, which is what makes student accommodation such a successful market for both landlords and students. Calum MacInnes, chair of SAPRS said that the Renters Rights Bill brings new risks to the UK student housing market and to students’ ability to be able find appropriate accommodation. He says

 a straightforward solution remains – retaining the fixed-term tenancy system for the private student housing sector. This approach offers security to student renters and ensures landlords can make their properties available to new students at the start of each academic year.

He fears if the Bill is not changed, not only will the housing system for students be permanently damaged, but the higher education system will be as well.

Battersea Dogs Home to work with landlords

Battersea Dogs Home has launched a new Pet Friendly Properties campaign where they work with landlords and tenants to try and keep pets with their owners if they move into a new rental property or where tenants are told that they can no longer keep a pet.

They claim that the UK is very behind other countries in its attitude of keeping pets in rented accommodation, but they welcome the Renters Rights Bill where having a pet should not be unreasonably refused by a landlord. They claim more and more people are renting, and having a pet can save the NHS £2.4 billion every year, with benefits for both physical and mental health that a pet can provide.

Battersea Dogs Home plans to develop their guiding principles and where permission is granted, that it lasts for the duration of the tenancy and that moving forward, there is a positive ‘culture shift’ in accepting pets in rental properties.

And finally

The BBC has set up a ‘housing tracker’ page where you can input your postcode and see how many homes have been built in your area.  Find it here.

Snippets

Council slammed for holding landlords responsible for tenants’ fly-tipping
Labour considers EPC C exemptions for listed buildings
Can increasing the supply of rented housing bring down rents?
Action needed: social housing providers must be made accountable for the treatment of their tenants
‘Ours was inspired by the Empire State Building!’ The chaotic brilliance of the UK’s biggest self-build town

See also our Quick News Updates on Landlord Law

Newsround will be back again next week

The post Landlord Law Newsround #384 appeared first on The Landlord Law Blog.