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Can I Write To The Tenants And Tell Them Why?


HarveyR

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Hi,

 

I hope you are all well today.

 

I am very new to the property hub and would be very grateful for a bit of advice, if someone has the time please.

 

I have a property that has recently come up for annual renewal, and the tenants wanted to stay again for another

year, this will be their third year.

 

Having paid the full amount of fees to the letting agent for the first 2 years, I asked them for a 2% reduction of this

years renewal fees. Any new lets would go back to the original fee agreed. However, they declined and would not

offer me the discount, which was disappointing as I have been with them for about 6 years.

 

So instead of giving the tenants notice, as this would have been around Christmas time, and instead of renewing for

12 months as the tenants wanted to, I requested that an extension of only 6 months be carried out.

I would like to write to the tenants giving them a reason for my decision not to extend for 12 months, but I am unsure

as to whether to include details of my request for discount to the letting agent, and their subsequent refusal.

Any help or advice would be greatly appreciated.

Thank you very much.

Kind Regards

Harvey
 

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If your contract with the letting agent is for a set fee it is not usual to reduce it for continuing length of tenancy.  That said if you feel that the agents have outpriced themselves I would look to exit and change agencies.  Have a look at their fee structure - what are they charging for?  Compare it with other agencies - you do not owe them.  If you do change make sure you choose an agency that is properly qualified and have a fair fee structure.  If they do not advertise their fees in a transparent way they are violating consumer law and you would not be liable to pay the fees.

If you are happy with the tenants and think that they are likely to stay - do not renew the fixed tenancy agreement and allow it to convert to a statutory periodic tenancy which does not require further renewal.  All that is required is for the agency to re-issue the the Prescribed Information within 30 days of the change over and it need not be amended again for the duration of the rest of the tenancy.

The agents may not like this as their income stream will be effected and may even try to tell you that it cannot be done but it is perfectly legal and you will continue to properly protected.  In fact one of my son's had a barny with their agent who tried to bluff them into re-signing their tenancy agreement saying that it was not possible - they obviously had not read their own agreement as it was set up to roll into a statutory periodic and they were very grumpy about it being pointed out - but they capitulated after he sent them a version of my email!

That said, it may be worth finding out if your tenants are on some form of benefit as it has recently come to light that some landlord insurance policies will not cover periodic tenancy agreements - if they are - check your insurance small print!

It is worth bearing in mind that however, that your agents have found and managed tenants who have have provided you with a steady income stream for several years and this too could argued to be providing you with long term value for money and the costs of poorer quality tenants could be dramatically more than the 2% you are trying to save.  A good agent works hard on the landlord's behalf and if their rates are reasonably fair don't upset the apple cart.

If you want me to look at the agency agreement that you have signed I can give you my email address.

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Hi Tim and Robert,

 

Thank you very much for taking the time to answer my question.

 

Having never studied the AST, when it converts to a “statutory periodic tenancy” does this mean it is just a month on month contract? So, at any time the tenants or I can just give 30 days’ notice?

 

Tim, I am not sure what you mean about the sentence below, and I would be very grateful if you could explain a little more for me please.

 

“All that is required is for the agency to re-issue the Prescribed Information within 30 days of the change over”

 

The current agreement with the agents is for them to collect rent for me, as I am abroad a lot. What would happen here? I presume I would have to get the tenants to pay me directly? I did already say this to the agents, as part of the reduction of fees proposal, that I would handle the rent collection instead but they refused.

With regards to contracts between landlords and agents, should these be done generally on a per property basis, or a per tenancy basis? In other words should a new landlord/letting agent agreement be signed every time new tenants are found?

 

My concerns with rolling the AST over, is firstly the rent collection and secondly I think this would cause bad blood between the agent and I.

 

Again thank you very much for you time in helping me out with this situation.

Kind Regards

 

Harvey

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Harvey

 

I am pleased that you are asking these questions, but a little concerned that you have been letting for 6 years and your agent has not given you proper advice or supported you during your tenancies.  It sounds like a quick trip through some some basics about letting is required and I will then ask some specifics.

 

An Assured Short Term tenancy agreement is the default and pretty much standard tenancy agreement for the vast majority of lettings in the Private Rented Sector (PRS).  An AST can run for any period up to 3 years and predominantly has at least a 6 month minimum period as a tenant is protected from eviction for the first 6 months a tenancy and so even if the agreement was set up to end before the 6 point you would not be able to get them out of the property, even by going to court, because of this protection.  If a fixed term tenancy is not re-signed but the tenants stay in the property and continue as before, the same tenancy terms continue going forward but the tenancy agreement changes to become a Statutory Periodic Tenancy.  This means that the tenancy can progress for an indeterminate period until either the tenant gives their notice or you seek to end the agreement for some reason.  In these circumstances the tenant only needs to give you one month's notice in writing (post or email is normal but text is often accepted now too), but you have to give a minimum of 2 months notice and again in a specific format known as a Section 21.  You can do it by mutual agreement but it depends on the relationship you have with the tenant.  A Section 21 notice is pretty straightforward but if you get it wrong and you need to go to court to remove the tenants, a judge will throw out the case until the notice has been proeprly served and delays the whole process by weeks.

 

Most landlords expect their tenants to pay a deposit or bond at the start of the tenancy as a way to encourage them to look after the property and return it in a satisfactory state at the end.  It is not a legal requirement, but it also provides near instant access funds to pay for minor damages at the end of a tenancy and may be used by some to recoup some unpaid rent.  However, if a deposit has been charged it is a legal requirement for the deposit to be protected in one of 3 government backed deposit protection schemes so that the tenant has a right of redress if they feel the landlord is trying to charge for unjust fees.  As part of the deposit process it is a mandatory requirement that a form known as the Prescribed Information is served to the tenant which needs to be signed by both you and the tenants and a copy kept for both.  At present, this needs to be re-served on each occasion that a tenancy agreement is signed and it also needs re-serving when the tenancy goes periodic.  If your agent was arranging the contracts they should have done all this on your behalf, but you should have had a copy to prove that it has been done.  The down side to the prescribed information not being served properly is that, if the tenants took you to court, you would not be able to serve a Section 21 notice to end the tenancy and you would also forfeit the deposit (no matter what damage had been done) and you would also be liable to pay up to 3 times the deposit as a penalty to the tenant - and this has almost become a default fine to landlords.  Even if you agent was at fault for not doing this correctly, you the landlord are liable for the fines and conviction so it is worth checking the professionalism of your agents!

 

 

From your OP it sounded as if the agent was renewing the tenancy each year with a new one-year agreement - and they were charging you for the privilege, which is often done if an agency is managing the property as part of their service .  However, your last post suggests that you are using them for a rent collection service, which usually means you do everything except collect the rent.  Not sure which fits your case?

 

I would take a close look at the tenancy agreement that has been signed and also get sight of the prescribed information and check that this has been done properly.  http://www.legislation.gov.uk/uksi/2007/797/article/2/made known as "The Housing (Tenancy Deposits)(Prescribed Information) Order 2007" will give you the information that is required and the agent should provide you with the details of the deposit scheme they have used on your behalf.  It would also be worth digging out the agency agreement you signed (or get a copy from the agent) and check what you have agreed to.

 

Regarding "bad blood" you are employing the agent as a business arrangement - they are not doing you a favour.  It is perfectly normal to run on a periodic AST, particularly if you have established and settled tenants; I have 2 that have been running for over 5 years each and there is no sign of them ending, both we and the tenants are properly protected and the arrangement works for both parties.  

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Hi Tim,

 

Thank you very much for your reply and for taking the time to explain these points, very much appreciated, thank you.

 

I will definitely take a look into the “Prescribed Information” relating to the deposit as I have never seen anything about this. If the agent has completed all of this on my behalf, and acted as I presume as “The Scheme Administrator” would I still have needed to sign the documentation?

 

If you don’t mind however, I am still a little confused as to how letting an AST change to a “Statutory Periodic Tenancy” would help me in regard to the Agent’s renewal fees.

Looking at the property contract I signed with them, I have come across the following clauses;

 

1) “The Tenancy” shall mean the entire period that the tenant remains in occupation of the Property including any extension or renewal or period of holding over whether by way of memorandum, agreement, or otherwise.

 

2) (Agent Name)’s commission is an agreed % of the total rent payable for the entire length of the tenancy stated in the Tenancy Agreement plus VAT, payable in advance at the commencement of each Tenancy and/or extension or continuation.

 

So by letting the tenancy agreement change to a “Statutory Periodic Tenancy”, would this null the above clauses?

 

Also, just to clarify please, should a property agreement be signed for every new tenancy, or can it just roll and roll indefinitely. The reason I ask is that the agreement I have was signed at the time of the previous tenants, not the current ones.

 

Thank you again so much for the help you have provided me so far, and for any further help you can give.

Kind Regards

Harvey

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Harvey

 

Apologies for the delay in responding to your queries, it is getting more than a little difficult to assess where you are at with regards to the agreement that you have with your agent and also what you have engaged them to do on your behalf.  Remember that the agent works for you and takes your direction (provided that it is legal etc :) )

The agents cannot:

Tell your tenants to leave  or serve notice on them without your specific instruction to do so.

Re-sign a new contract on your behalf without your specific instruction.

Stop you from giving them notice to terminate their services if you are unhappy with what they are doing - check your agency agreement - there may be a specific time period, but if it is unduly onerous it is not likely to be enforceable in law - 2 weeks - 2 months is fairly normal.

 

You may need to take specific legal advice if they are unhelpful - bad press and loud, unhappy conversations in the lettings office can be a good way of persuading the agency to capitulate - it is probably not worth them fighting the case.  It certainly sounds as though they are more interested in their fee than the advice and management of the situation - which does not bode well for what they really do.  If the tenants have already been in place for 3 years and want to stay on I would be tempted to try going it alone for a period - this would however require you to be a bit more aware of what is really involved in letting but it sounds like the tenants maintain the property and pay the rent on time on target.

 

The tenancy agreement that has been signed should be between you and the tenants and so it is largely immaterial who is managing it and can continue without alteration into the foreseeable future.  As said before, if the tenants remain in place at the end of the fixed term, it automatically changes to the Statutory Periodic Tenancy Agreement (SPTA) and the only change to the existing agreement is that the end date becomes indeterminate.  Both you and the tenants have the right to terminate it within set time frames - the tenants need only give one month's notice just prior to a rent day and you the landlord have to give a minimum of 2 months notice.

 

If you want to scan and email me the agency agreement I will take a look at it for you - I do however need to put the caveat on this that I am not legally trained/ qualified so it would be a layman's view of what you are signed up to, but it might help if another set of eyes were involved.  My email address is tim.wragby@btinternet.com - a scan of the tenancy agreement could also be useful as I successfully resolved an issue my eldest son had with an agent in Sheffield who did not really know what they had issued until I gave him all the ammunition he need for them to back down.

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  • 3 months later...

Hi Tim,

I hope you are well and thank you very much for asking.

 

I could never really get a definitive answer on the contracts, so I have decided to

leave things for now. I will let the contracts go on to statutory periodic tenancies

and look to change when/if the tenants want to move out.

The agent will not budge on their fee, and so I don't really know where I stand

legally to fight that.

Kind Regards

Harvey

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It is completely legal as the tenancy agreement with an AST is between the landlord and the tenant.  The agent is just that - the person who acts on behalf of the landlord to carry out their business on a day-to-day basis.  Who the landlord chooses to do this job is their concern and the contractual arrangements are between the landlord and the agent and the tenant has no say or involvement in these arrangements.

Sometimes I am surprised that landlords to not sack poor agents more often.  I am just in the process of picking up several properties from landlords who have had their agent go bust for poor professional services and the agent they have sold on to are equally poor.  There is not a lot that the new agent can do as these landlords jump ship and seek me out! :)

More landlords should hold their agents accountable for the services they are contracted to provide and so often fail - seek out an agent who is able to deliver consistently good standards of service to both landlords and tenants alike.

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Hi Guys,

THank you very much for your replies, I really appreciate the time you have spent.

My issues are with the following clauses in the property contract I have signed with the agent, and
these are what I cannot get definitive answers on from a legal standpoint.

1) “The Tenancy” shall mean the entire period that the tenant remains in occupation of the Property including any extension or renewal or period of holding over whether by way of memorandum, agreement, or otherwise.

2) (Agent Name)’s commission is an agreed % of the total rent payable for the entire length of the tenancy stated in the Tenancy Agreement plus VAT, payable in advance at the commencement of each Tenancy and/or extension or continuation.

Thank you again.

Kind Regards

Harvey
 

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