Can agents claim commission for another year when the landlord wants the tenants to leave?

This is a question to the blog clinic from Tom who is a landlord.

We want to move into our flat in about 75 day time from now and occupy it for a few months or more. We don’t want to sell it.

The tenant is on a fixed term agreement which ends in 15 days. We told the letting agent and they want to charge us a full year’s worth of their fees (ie. 10% of annual rent) because they say that the tenant may not move out even though they give the tenant notice to vacate.

We told the Agent that they should charge us 10% of the monthly rent for the months the tenant is in the flat, not of the annual rent. It would then be 10% of two month’s rent. The letting agreement is silent on termination.

Is there any way I can prevent the Agent from charging a full 12 months worth of fees?

Answer

Your agent’s entitlement to fees depends to a certain extent on the wording of the clauses dealing with their commission. However, I can’t see how they can be entitled to a further years commission when you want the tenants to leave.

Your agents are correct, the tenant may not move out. Tenants are legally entitled to remain in the property until such time as you have obtained a court order for possession and a bailiff’s appointment (although few will want to do this).

Even if the tenants stay on though, they are unlikely to remain in the property for a full year. Even if you have to obtain a court order, you will almost certainly have got them out within 12 months.

So if the agents deduct 12 months worth of commission part of this will be for a period of time the tenants are not in the property. Which would be grossly unfair.

And why should the agents be entitled to commission anyway when they have failed to carry out your instructions to obtain vacant possession of the property for you? If they think they are going to get paid more if the tenants stay they’re not going to try very hard to persuade them to leave, are they?

Any clause in their agency agreement which authorises your agents to deduct a full years commission in circumstances when the tenants have been given notice to vacate will almost certainly be void under the Unfair Terms rules.

It is this kind of behaviour which gives agents a bad name, which is so unfair on all the good agents who don’t do this sort of thing.

If the tenants are paying the rent direct to your agents, then there is not much you can do (short of getting a court injunction) to stop them deducting their commission from the rent received.

However, I think you need to tell them that if they do this, you will be making a complaint to their Property Redress Scheme and will be asking the Ombudsman to order them to refund the commission and also pay you compensation.

I suspect that these agents may be in financial difficulties and were counting on getting your commission for a further year. So this may be an exercise in damage limitation.