Renewal fees

I was thinking I could renew direct with the tenant that Foxtons introduced 2 years ago, after a year of paying 17% and then another year of 17% for the first quarter and then 11% for them doing nothing but renewing the contract each year for which they are also charge, I decided anough was enough.  I called them thinking this would be simple, but have been informed about T&C's which state that they are contractually entitled to continue taking 11%.  I need out of this contract -I want all of my money and dont see why they should be paid for doing nothing!  Has anyone tried formally terminating the tenant with Foxtons but actually privatley renewing the contract with the same tenant?  Any advice on this welcome..

This will make you laugh....or cry!

What you are suggesting doing is a practice that Foxtons has it's own name for - a Comms Dodge. If they suspect you are committing a Comms Dodge they will employ a private detective to gather evidence of what you are doing and sue you for the outstanding commission. There are certain tell tale signs of a comms dodge

1) If you and the tenants both say you want to renew and then suddenly change your mind

2) The landlord asks for the whole deposit to be paid to him "and he'll sort it out direct with the tenants"

3) Neither the landlord or the tenant call in about the deposit at all - it often gets forgotten if they are not moving out.

If you do privately renew you may get away with it if your clever but if see a man in a rain mac and sun glasses hiding behind a paper outside your property then you're goign to get caught!

Hello there, I am employed by letting agent. Before your levels of anger rise to a terrible level, I would like to say that I do have a certain degree of sympathy for a number of landlords who have found themselves slapped with a huge bill by their agent.

Firstly I think that Foxtons are a particular breed of agent, one which relies very heavily on its inflexibility and particularly clever sales tactics (although most employing the tactics are not necessarily clever) which when combined can catch out the unitiated or unsavvy landlord. There are many others like them in London and my initial advice would be read the terms and conditions you are signing very, very carefully. One tactic employed would be to not have you sign terms until the very last minute, when your property is about to become vacant and they have an offer from a tenant on the table which "will not go through unless you sign the terms in the next 10 minutes". The small print format of Foxtons terms almost guarantees you will miss something.

At the end of the day, most agents in the current marketplace are hungry for business and will negotiate, Foxtons in my experience will not. There are plenty of mid-size agents in London who are competent, have a strong market presence in local areas and will do as good a job as you could wish for in finding you good tenants. Most smaller agents will offer you the lowest fees, but often cannot let your property fast enough or at all.

With regard to the case itself, this hinges on the issue of whether a landlord is a "consumer". If the court thinks not, then the OFT are unlikely to be sucessful. The question most landlords will have to ask themselves is whether or not they truly believe they are a consumer. Past case law would point towards a firm no, but precedents can be changed. One must also consider the public ploicy aspects of the High Court agreeing that landlords are consumers; this will have implications for taxation of landlords and may mean that other points of consumer law affect how landlords must operate. I think a successful result for the OFT may be worrying for the government (not just agents).

I think there are a number of ways to try and evade commission, many of which can work quite sucessfully, but I will stop short of giving recommendations. If anyone wants to share ideas though it may be interesting.

At the end of the day, when one signs a contract it should be read thoroughly and if you feel you wish to negotiate you should try. If your agent is unwilling to be flexible then you either accept this or you do not and find another one. You are signing a legally binding document which relates to the income on one of the biggest investments you will make in your life, and great care should be taken not to allow a 12 year old in a Mini Cooper dressed up as Red Rum to pull the wool over your eyes.

Most landlords in my experience are happy to pay for renewals as they appreciate the benefit good tenants bring them - paying the mortgage on their investment which will in time bring them a significant capital gain.

As I said previously, I do sympathise with many who have been pushed into signing contracts they have not been given full opportunity to read or understand, but all being adults we have to take responsibility for our own actions.

I'm looking forward to the case being heard in court, but unfortunately this doesn't look very likely in the immediate future. So for the time being their terms are binding, but who knows if they will have to pay back commission....

Hi There, it will be calculated on the new rental amount, but in fairness that is the same with all the agents.  You could try to get a discount though especially if you collect your own rent.  If you arrange the renewal with your tenant direct and provide your own addedum paperwork they have no right to charge you a renewal charge, I think it is around £200.

Let me know if you need any more help. 

Can you go back and read what I put!  I said I did not pay a fee for renewing, of course I paid renewal fees!! This fee is in addition to the percetage of the rent you pay.

for gods sake man!!

can the person (landlord) terminate the contract with Foxtons? is there any way out?

Er, no.  Some estate agents might go out of business, but most will just push up their 1st-year fees a little or, if they have any sense, offer a decent service in subsequent years at a price landlords are willing to pay.

You will not just see "some agents" go out of business, I would imagine maybe 50% of letting agncies will close. Your suggestion of charging more up fromt is just non sensical, as the agent would need to charge 1 and half times the initial fee which would then enforce the landlord to possibly not accept the offer in the first place as they have to spend too much up front. also what if the tenant only stays one year then the landlord would have paid for higher fees for nothing!

There has never been more of a case then now for this industry to be regulated and the government are trying to make the letting process more fairer, the introduction of the tenancy deposit scheme is a good example of this. But by an agent not charging a renewal fee then this will mean them losing maybe 20-30% of their annual and in the middle of a recssion even the biggest of agents will be forced to close. But this will just lead to the industry becoming even more un regulated, with landlords and tenants opening themselves up to being turnt over at every opportunity!

I believe the answer to this problem is for the renewal fee to be reduced to maybe half of the original let only fee instead of the current 7 0r 8% renewal charge. This may be deemed as more fairer but cutting the renewal fee completely will bring in massive implications which will in the end effect the landlords who are just trying to save a couple of quid from it!

As far as I am aware, the practice of charging an ongoing % fee for a tenancy where the agent has only been involved with the letting and not the management of a property is mostly found in London and the SE. Certainly up in Newcastle the general practice is to charge half a month's rent as the letting fee regardless of whether it is a 6 of 12 month contract, or whether the tenant stays on. Obviously if the agent collects rent of manages the property or negotiates a new tenancy then a fee is due.

As for the Foxtons case, you may wish to look at http://www.estateagenttoday.co.uk/News/Story/?storyid=943&title=Foxtons_case_leaves_agents_in_limbo_over_renewals&type=news_features

Or http://www.mypropertyguide.co.uk/articles/display/10096/letting-agents-in-limbo-over-renewal-fees.htm

 We are going through a court case at the moment - will let you all know the result shortly....

I'm a landlord myself, and i can smell greed on other peoples hands here. Fact is - if Foxtons get screwed in court, it will be hillarious. The next rental I'll do, instead of the usual 1 year, i'll ask for the contract to be 3 months, with the option to renew for another 9 months after this.

Then I'll end up only having to pay the 11% on a quarter of what i normally would have done, and the renewal will be dirt cheap! Everyone will follow this model.

This will bankrupt most estate agents, as it would any company whos revenue gets reduced to 25% of what it once was. The entire point of me using an estate agent is that I don't want some sort of dodgy gumtree type drugdealer wheeler-dealer person living in my £400,000 investment in the first place.

So really while the estate agents are dodgy, this case is just about the greed of landlords, and any other landlords who're suggesting we avoid similar renewal fees etc - are living in cloud cuckoo land, the consequences will be worse for us at the end of the day.