Here is a question to the blog clinic from Raymond (not his real name) who is a tenant:
I found a house to rent in London for me and my 14 year old daughter. It was the perfect location as her current school was close by.
I negotiated a rental price of £3000 pcm but only wanted a 12 month contract. The landlord was happy to agree to £3000 pcm month but only if I was to sign for a longer contract. The letting agency pushed me to sign a 2 ½ year contract which the landlord was happy with.
I signed the contract for the rental agreement to start on the 2nd January 2014 when I would take possession of the keys and move in. I gave the letting agency £3000 for the first month’s rent and £4500 deposit which was 1 ½ times the rent.
I signed the contract on the 12th November 2013 and the lettings agency sent it back to me completed on the 20th November 2013 which is the day it was signed by the landlord and lettings agency.
At this point I had never been advised by the letting agency about any compensation payments to the landlord or themselves if I needed to cancel the tenancy which obviously at the time I didn’t need to do.
Unfortunately my circumstances changed quite dramatically and left me in a position where I had to inform the lettings agency that I needed to cancel the tenancy because I couldn’t stay in London and had to find a property in the Northwest of England immediately instead.
I told the lettings agency about this on the 2nd December 2013 some 12 days after the completion of the tenancy agreement. This is when they informed me that I couldn’t get out of the agreement and I was obliged to carry on paying the landlord rent when it starts.
I negotiated with them and they placed the property back on the market for rent. I asked for my deposit back and my first month’s rent and they refused. The lettings agency now informed me to read a section in the tenancy agreement which stated I needed to compensate the landlord for his payment to the lettings agency.
What I never ever knew or was told was the landlord had already paid the lettings agency 8 ½ % of the 2 ½ years rent as a finder’s fee. This totalled £9180, £7650 plus £1530 VAT.
I was gobsmacked and never expected this and voiced my concern to the lettings agency. They have told me that my deposit and 1st month’s rent will be going to the landlord and I will not see any of my money.
I spoke to the landlord and he has told me that I also need to give him the difference to make up the £9180. Even after this payment they are saying that I am liable to pay the £3000 rent even though I am not going to be living in the property.
Obviously if they find a new tenant, I will not need to pay any rent. I have told them I will not be paying rent for a house I am not living in. I have looked at the tenancy agreement again and it does not mention anything about how much the landlord had to pay the agency so I was totally unaware of this.
It does state as a special tenancy condition that “in the event of the tenant vacating the property prior to the expiration of the term the tenant shall be responsible to compensate the landlord of any sums paid to the agent as a form of commission for the remainder of the term”.
I was never informed of this before signing the agreement or else I would never have agreed to this. 12 days after receiving the agreement is when I informed the lettings agency about my unfortunate situation and need to cancel the agreement.
Surely like with most things you buy or agree to you have a cooling off period where you can actually say no I wish to cancel? Even as I write this the actual agreed date for the tenancy to start is still 2 ½ weeks away. Can you help please? Thanks you.
I am afraid you are in a rather difficult place. Let us take a look at the issues one by one:
1. Cooling off period.
I am afraid tenants do not get a cooling off period unless the property was rented without being viewed first (as happens with some student lets). >> See here for more information on this.
2. Ongoing rent
Again, I am afraid that once you sign the tenancy agreement you are bound by its terms and the landlord is entitled to be paid rent, on a month by month basis, until then end of the fixed term – whether you are living there or not.
After all so far as the landlord is concerned, its not his fault that you are moving to the North. He has performed his part of the bargain by making the property available to you.
- Break clause – Take a look at the tenancy agreement and see if there is a break clause. There should be for such a long term. If so I suggest you activate it immediately. That will at least limit the period of time you are required to pay rent.
- Finding another tenant – If you are able to find a suitable tenant yourself, your landlord should agree to re-let to them and let you off the hook. If they refuse (and there is no provision on the tenancy agreement for ending early), then the Office of Fair Trading Guidance on unfair terms indicates that any contract clause forbidding assignment of the lease after 3 months will be invalid.
So the best thing to do is see if you can find a replacement tenant yourself. There is no legal obligation on the landlord to do this by the way. So there is no comeback against the landlord or his agents if they don’t find anyone.
3. Compensation for early termination
I have to say that, in common I suspect with many readers of this column, I am (like you) gobsmacked at the amount of compensation they are asking from you.
My view is that this clause is unfair and therefore void, for the following reasons:
- It was buried in the ‘small print’ and never properly explained to you before you signed and
- The sum is based on a payment made to the agent under the terms of an agreement which you have never seen and knew nothing about . It is a general rule that you cannot be bound by an agreement where you have not been provided with a copy of it or informed of its terms (or those terms which affect you).
The concept of compensation for early termination is not of itself unfair and I would have no problems with a charge for re-marketing the property and maybe drawing up a new tenancy agreement. However I think the claim for the agents fee charged to the landlord is unfair and unenforceable.
So in summary – you are not entitled to a cooling off period, you are responsible for the rent until the property is re-let to a new tenant or the fixed term comes to an end, but I do not think the clause regarding compensating the landlord for the agents fee is enforceable.
What should you do?
It would be a good idea to try and find some replacement tenants yourself, if you can.
So far as the agents fee is concerned, I suggest you tell the agents that this charge is unenforceable against you under the Unfair Terms in Consumer Contracts Regulations, and that if they attempt to charge you this you will challenge it, in the courts if necessary.
If the agents are a member of ARLA, or the Property Ombudsman scheme or any other regulatory body, you could threaten to make a complaint if they continue to impose this charge.
You could also threaten to report them to Trading Standards who, along with the Office of Fair Trading, police the Unfair Terms in Consumer Contracts Regulations.
Finally, if you need further advice and representation, the Landlord Law associated solicitors Anthony Gold would be able to assist.
There is a >> fixed fee telephone advice service on Landlord Law which can be used for preliminary advice.