This is a question to the blog clinic from Elizabeth who is a landlord.
For the last 3 years the Estate agency I used to find my tenants keep charging 6% renewal fees even though they are not doing anything for me.
My question is : This time I refused to pay then anymore renewal fees although the tenants they introduce are still living in my property under the same previous contract, terms and conditions and i didn’t increase the rent.
Can I still refuse to pay the agency under the Statutory Periodic tenancy? Can the agency still retain the deposit?
If the agents are not managing the property, any clause in the tenancy agreement which requires you to pay renewal commission indefinitely will normally be considered unfair and unenforceable.
This was decided in the case of OFT v. Foxtons in 2010.
I understand that Foxtons were going to appeal the decision but an agreement was reached that the OFT would not challenge a clause which provided for a lower rate of interest for two years only. This is generally considered to be an example of a fair renewal fee – anything more onerous than this is vulnerable.
So I think you have a good chance of successfully challenging your agents on this point – depending on what the wording of the clause in their agency agreement actually is. You will need to check this.
However most agents are aware of the Foxtons case and will be unlikely to take you to court for the fee.
So far as the deposit is concerned, there is no reason why they should not continue to hold this. Although if they are no longer involved in the management of the property you may want to get the money transfered to you so you can deal with this.
Incidentally, I have known one case where the agents tried to deduct their commission from the deposit money in this sort of situation. This though is wholly wrong as the money belongs to the tenants and so cannot be used for money due from the landlord. If this happened though you could complain to your the Property Redress Scheme.