At a time when letting agent fees are under the spotlight, where do you stand on renewals?
A letter from a Countrywide agent was shown to Eye, asking tenants to pay a renewal fee of £125 for a further six-month fixed term tenancy – or move out.
Interestingly, the tenant does not seem to have been given the option of allowing the tenancy to become periodic, albeit risking being given two months’ notice – and no explanation given regarding the notice period that will apply if they do not renew.
We wondered what other agents might make of this?
Shelter and Generation Rent are on the case about fees and whether tenants are always being made aware of their rights, while it is not so long that Foxtons was challenged in court over its renewal fees – fine, said the court, as long as they are not hidden away in the small print.
So, renewal fees remain a hot topic.
Putting yourself in tenants’ shoes, with an initial fixed term tenancy coming to a close, could some tenants feel pressurised into renewing if sent a letter like this?
Would tenants feel they are being given a blunt choice – pay the renewal fee, or move out?
We are not sure of the specifics in this case but hypothetically what would the landlord, who may also have been charged a renewal fee and may not even know the tenant has been approached, make of it?
A lot of the recent debate has been about application fees. In fact, the Labour attempt to ban upfront fees as part of the Consumer Rights Bill would also have extended to renewal fees.
We should make it clear that this renewal letter is by no means universal across Countrywide branches.
A spokesperson told us: “The charging of renewal fees is not consistent across Countrywide Residential Lettings. With over 100 acquisitions, we have different fee structure arrangements with tenants and landlords.”
Start the renewal process 3 months before the end of the tenancy, this makes sure no one feels pressured. Communication, transparency and delivery of the renewal process is a key point to note.
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No matter when you receive the letter as a tenant it still comes across as “pay up or leave”, which is really poor practice and border line bullying.
Who wouldn’t feel pressured in to paying in order to not be made homeless?
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The process to be followed should be the one as stated in the original contract that was signed. If it clearly states there is a renewal fee, then one is due. For too long estate and lettings agents have been expected to provide a service for £0. Solicitors and accountants charge by the 5 mins of work produced. Why should estate or lettings agents conduct work, including paperwork for renewals, as a free service? They have bills to pay too, don't they?
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Couldn't agree more and it is extremely irritating that people constantly expect something for nothing!
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there if a fine line as some agents constantly charge and do as they wish like all the big estate agents im a small independent I charge £150 application that's it no mor charge to the tenants for as long as they are there and we do ok
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No matter when you receive the letter as a tenant it still comes across as “pay up or leave”, which is really poor practice and border line bullying.
Who wouldn’t feel pressured in to paying in order to not be made homeless?
We have to consider what is the fee for exactly?
The agent will literally open up the existing contract (word document template) set the 2 dates (start and end) and print 2 copies, for posting that you as the tenant and the landlord both get charged.
It doesn’t feel like a fair practice to me when the tenant is not interested in receiving “further services” from the agent and under UK tenancy law this service is not required but if the landlord wants this to happen then they should pay the cost of this. Charging the tenant on top is just plain wrong IMO.
To make this fair maybe the tenant should be able to take on their own agent to deal with this process and the fee’s get passed back to the landlord too, it just makes no sense and is shady as hell.
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What do Agents think? This is the sort of pot calling the kettle black rogue practice that makes it impossible to tell the good from the bad.
If is not morally correct to single out small fly by night agencies and condemn them as rogue when Agencies with a full set of windows stickers are using every opportunity to mirror practices they publicly condemn.
Instead of asking Agents for a comment it would be really interesting to hear what SAFE and Christopher Hamer have to say about this with a full investigation into what other roguery is going on.
Isn't blackmail a criminal offence?
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Ignore the letter – if you receive another one then ask the agent to ask their landlord if they'd like to be served a Section 21 notice to leave because they refuse to pay renewal fees. I'd advise any landlord who's agent charges to renew tenancies to find out whether their tenant has been served a Section 21, and on what basis.
Two words.. Money Spinner.
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I as a tenant have been debating this option the problem is I don’t know where I stand and the agent has made comments like “as per our contract with your landlord if you do not sign this new contract you will be served a section 21 notice”.
I don’t know how much of this is lies, but it’s worrying enough for me to just take the bullying and pay the fee.
After a few years of this i’m looking for ways to challenge the agent in to justifying this extortion as I was initially told (although not in writing) that shorthold tenancy agreements are served to all tenants to “allow the landlord and tenant to get used to each other and see if they fit”, now they deny that conversation ever took place and i’m in a constant blackmail scenario that could leave me homeless / looking for a new home.
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as I posted yesterday on the tenant fee ban this should all be regulated to stop agents doing this im a small independent estate agents I charge £150 application fee that's it once the tenant is in there is no more charges to the tenant If I can do it they can
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Is it any wonder that Letting Agents are in the spotlight? – Large corporates (with huge back office + middle and upper non-fee earning management structures to support) are as money grubbing and tawdry as are unscrupulous independents looking to bleed clients dry before going bust.
A 6 months contract that is set up to go contractual period after from the outset means no additional admin is required until the tenant or landlord gives notice except the routine of collecting rent and handling maintenance.
Sadly the professional bodies (ARLA et al) appear toothless/ unwilling to eliminate these practices from their member organisations or actively police the market to root them out and so expose the rogues who would not be able to join such a body. Membership is largely a pseudo-respectability to hoodwink the general public.
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Hence I am no longer a member of ARLA or NAEA. Toothless describes it perfectly. Bring in mandatory licencing and auditing and prosecute those that flout.
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I don't charge anything after the initial admin fee – it's a selling point to my tenants – I don't charge the landlords either, that's a selling point too! After all, it's only a 5 minute job to reproduce the tenancy agreement, but change the dates. Too many agents overcharging – no wonder 'they' want to clamp down on us!
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You are my dream letting agent … this is all I wanted when I approached my current agent, it’s sad that they feel this is fair practice but worse that the law is vague enough that it’s not considered directly legal.
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I have no issues with the principle of such fees, and it being shared between tenant and landlord. But at £125 a pop, with or without VAT, is this not why the industry needs to get their act in order; it is in my view just too much, especially as I strongly suspect the landlord is also being charged the same amount. And why for only six months? Daft question, because we all know why; again, another reason why WE will be the cause for a ban on fees being successful.
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It must be pretty galling to receive a demand for £125 when your rent is only £400. This is one of the reasons that Countrywide has been so anti displaying fees. When you have a huge cost base to maintain you need to make money anyway you can.
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have you noticed all the small independents show there costs with very small extra charges if not any in some cases but the big guys in the estate agency world charge and do as they wish
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We do charge an admin fee of £50 which i believe is a fair and relatively minimal. We start the process 3 months before the end of the tenancy. There is a fair amount of time and cost involved in a renewal, and so, like an earlier comment, we cannot be expected to run our businesses on a £0 income basis as Shelter would like.
We are a buisness, Shelter is a charity. They expect us to work on the same basis as them which is ludicrous.
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Laughable comments really. Why should estate agents pay to advertise a property, and not charge tenants for referencing, contracts etc. Are we doing all this for free now? people not turning up to see our properties, tenants pulling out of deals, all this and we are not allowed to charge for this. In regards to renewel fees, yes we should charge for this. Tenants situations change in the initial 6 or 12 months that they have lived at the property. People lose their jobs, people become bankrupt, people also split up in relationships. Situations change and the landlord has a right to know if it will affect the renting of his property. Yet we have to do this, once again for nothing according to some. Yes i agree that there needs to be a scale or a limit on fees, and all made clear to the tenant. Having worked for a large corporate company and seeing how they charge, i understand why people want change but to stop fees altogether is a joke.
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I don't really see a need for a large admin fee. It's not exactly time consuming to type a new date and re-print an agreement is it?! I understand the initial referencing fee, we shouldn't be expected to do that for free, but anything after that seems greedy.
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I feel uncomfortable charging anything other than the intial set up and application fee. This recharging every 6 months is rogueish and will give the industry a bad name. If the tenant is informed they would know that they can allow the tenancy to become periodic rather than constantly be trapped into unsuitable 6 month periods. By all means charge a renewal fee if the tenant insists they want another fixed period, but to word the letter like this is scam-dalous….
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I think when discussing this we need to see the bigger picture. From my point of view I am an independent agent who takes my role within the market very seriously. I take the time and pay out money to undertake and gain proper professional qualifications and gain memberships. I believe that agents like that drive up standards in the industry for landlords and tenants in terms of the service offered, the quality of homes on offer, the insistence that regulations are met and managed correctly, etc. and we play an important role within the industry accordingly. I do believe that we should be able to charge for the professional, qualified service that we provide, however, I don't believe that we should overcharge. I also think that there is a lot to be said for customer service and communication in this instance too however. Tenants should be made aware of all fees and term prior to them commencing in any business transaction, they should be offered a renewal well in advance of the conclusion of their tenancy and the matter should be open to discussion and negotiation between all parties concerned. As agents we should not be the mafia, we should be seeking to negotiate on our clients behalf to benefit all parties concerned. Yes, we should be able to charge for the time it takes to negotiate between the parties, the paper, ink and time that goes into the renewal (don't we all wish with current regulation it was as simple as changing two dates). As long as, as agents, we are fair and just and upfront in all of our dealings with our landlords and tenants I don't see an issue. To be honest, I have worked for a corporate, they will make hay whilst the sun shines, it's the business model, but if knowing this landlords and tenants choose to use them, this is their choice and theirs alone. What we need is regulation that insists on upfront transparency in this industry so that tenants and landlords can decide for themselves and vote with their feet!
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we give tenants 10-12 weeks notice that the fixed term is coming to an end along with a selection of very simple questions to answer.
I/We would like to renew my/our tenancy
On a fixed term Yes No 6 or 12 months
With a break clause Yes No
On a month by month basis Yes No
We will be vacating at the
end of the tenancy Yes No
I/We would like an alternative
property Yes No
Unsure, please contact me Yes No
They are told that there is a renewal fee if they choose a fixed term tenancy but no charge for anything else.
The time and cost of just sending letters/emails out like this, and checking the responses as they come in, then preparing another agreement justifies our renewal fee as far as I'm concerned.
We ask landlords similar questions but also advise they need to confirm within a set timescale if they wish us to serve a S21 to end the tenancy. Landlords don't pay for a renewal.
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Why do you charge a renewal fee if you are getting management from the landlord? Let's face it, bar processing rents, someone popping out every few months, and the odd maintenance issue, there's not much management to actually do!
And yes, I am very anti charging tenants anything beyond commencement of tenancy, except where they stray from the terms of the agreement.
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I can't believe I'm alone in thinking that whilst lots of other businesses seem to charge what they like, there appears to be a real push to stop agents charging for almost anything. As an example it is not uncommon to see the following charges: Banks – £25 for a replacement statement, Airlines – £50 to change a passenger name, Insurance Companies – £40 admin fee to change anything etc etc. We live in a democratic capitalist market and as such we are all pretty much governed by the market place. I do believe that all charges should be transparent, but other than that I strongly believe that each business should be allowed to charge whatever it wants. If that charge is too high then very quickly that business will find itself losing market share to a competitor. We wouldn't dream of telling the local supermarket that they can't charge more than 50p for an orange or the local hairdresser to cap his haircuts at £15, so why should we believe it is ok to regulate charges on the lettings industry. I would also mention that if a tenant/landlord decides that they would like another fixed term contract after the initial 6 month term, we as the letting agent not only have to draw up the paperwork but we also have to re-secure the deposit. If we are not allowed to charge renewal fees then who will cover this cost….? As a point of note we never charged renewal fees until the introduction of the tenancy deposit scheme. We now charge £50 to both landlord and tenant to cover these fees and our costs.
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I can't help but agree that on the surface this looks bad for agents but equally it seems to me that what is overlooked by those who attack tenant's fees is the quasi legal role that letting agents fulfill in the process and at a fraction of the cost of lawyers.
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I don't think £125 is unreasonable to ask for a tenancy agreement even if it is for a 6 month period. If an agent doesn't display this charge to a tenant before they took up their first tenancy then that is where unprofessionalism comes in.
Our Tenancy agreement fee is clearly given to an applicant in writing before tenancy commences and the cost for a Renewing the contract is clearly stated in our tenancy agreement that both tenant and landlord will sign.
I think the critics out their assume that all we do as an agent is Print the tenancy agreement off and it is easy money for the agent. The truth of it is, some renewals of tenancies can be simple but some can take a lot of work.
I employ staff purely to deal with renewals as its an important job to be done correctly, We charge £150 to landlord and tenant which I sometimes think isn't enough for the amount of work that can go into it, there's time and administration all of which amazingly cost money.
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I’m sorry but how can anyone justify a £150 admin fee? It does not cost this much to re-print a few words on a few pieces of paper! Anywhere else I lived before, after 6 month is just became a rolling contract, I lived in a flat for 3 years and that management company never even attempted to charge me every 6 months! Countrywide did not mention anything about this fee to me before I signed the contract. It is a very underhanded way of getting money off their customers. I work hard and would want to know exactly what the damn fee is for. How much should I charge Countrywide for lying to me, or not bothering to reply to my complaints letters, or for being ignored when I raised the issues of disrepair and various other damage to the property caused by disrepair? Which the landlord can’t be asked to resolve? If there is a renewal fee, it should be transparent, and brought up to the tenant’s attention before they sign anything. Now I find myself in the position of either suffer financially for more than a month to cover this fee or get myself into further debt to move out. Is an extremely high price to pay for a dingy little studio flat that is crumbling at the seams and makes me physically ill. Disgusting!
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Agents service is to landlords not tenants. Landlord pays fee to agent to do his work for him, tenant pays a fee called rent…
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This is typical of the sort of response agents see every day based on a total misunderstanding of how this industry works. Rent is not a 'fee' cleatherby, it is not the agents money, it belongs to the landlord and payment of it is a contractual obligation placed upon the tenant by the tenancy agreement.
Very few agents if any include the cost of managing the tenants future, and thus as yet unknown, expectations in their management charge to landlords. And why should they? why should the landlord pay more in fees just on the off chance that a future tenant may or may not decide to extend their tenancy agreement by a few months?
In most cases landlords don't want a renewal, they would prefer a long term tenant – but as most tenants seem to want only short term lets we have the problem of renewing tenancies if they want to continue on a series of short term asts. Additional work = additional cost.
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Oh dear, cleatherby. Oh dear…
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Estate Agents appear to be the only people who come under fire when trying to run a business.
As long as these terms are made clear to tenants and they agree with them then what is the problem?
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£125! Only 6 month renewal offered!! Seems too much and too little to me. I wouldn't like to be going through that every 6 months even if my rent was £1000 per month, let alone £400.
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Agreed. And agents sit out there wondering why there's so much focus on us at the moment…
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@Macs
"As a point of note we never charged renewal fees until the introduction of the tenancy deposit scheme. We now charge £50 to both landlord and tenant to cover these fees and our costs"
Sorry to single you out. But £100 for what?!?!
Use the DPS custodial scheme. No membership cost to you as agent. Give your prospective landlords added incentive – and added reassurance that you really can't run off with the deposit!!! (How many ARLA agents using insurance backed schemes have disappeared… with the money too!?!).
If the deposit registration is free, that leaves an hour tops to do all the admin for the renewal. £100 an hour. Really??? I wouldn't use your firm.
I'm so bored hearing this 'who would cover the cost of the admin'. If you are collecting a management fee, surely renewal comes under the management role? If non managed, sure make a charge, but a reasonable one, say £30 to the landlord.
Everyone seems to forget, the landlord is running a business. If the landlord doesn't like paying for an inventory, agreements etc etc, YOU have not educated him properly. No one else's fault but your own. It's as simple as that.
As a one branch independent, I make the landlord pay for everything but the referencing. I tell them up front that they won't see much of the first month's rent. I have never knowingly had a landlord decline our services on the basis that we make him pay, not the tenant.
We are totally transparent on fees and charges, even before you walk in to the branch, to the point we genuinely get applicants calling us requesting we try to take on property listed with the other agent in the village – a large multi-branch moneycentric.
Stop whinging and start thinking differently. Be the agent that doesn't follow the flock. The business WILL follow.
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Ammik,
Just reading your reply. Im just curious, when you speak to the landlord, do you confirm the details of the tenant, employment details, credit details have not changed in any way in the last 6 months of the previous tenancy?? Or do you take the tenants word for it? Part of any contract extension is checking when the rents have been paid, periodic inspection results and looking through files just to see if there have been any disputes with neighbours, complaints about noise etc etc. This takes time and i am sure we don t do this for free. I am all for fees to be charged to the landlord and the tenant for this, but yes they have to be fair. People say its better and cheaper for the tenant to go onto a periodic. Well, any landlord that allows that to happen should not complain when his tenant moves out just before Xmas, and then he can t rent the property for another month. a fixed term contract is peace of mind for tenant and landlord. Management of properties is just not about picking up the rent each month.
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" Everyone seems to forget, the landlord is running a business. If the landlord doesn't like paying for an inventory, agreements etc etc, YOU have not educated him properly. No one else's fault but your own. It's as simple as that. "
Education does not always control a landlords financial situation.
Inventory Costs, PAT / Electrical Certificates / £500 for a Newham Landlords Licence, Gas Cert, EPC and then a letting / management fee.
Expensive
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