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  • Landlords in Distress

    Agency Commission refund

    HI I wonder can anyone help. I have been stung before by a rogue tenant and am trying to super cautious this time round so would really appreciate any advice.

    My estate agent has secured a tenant for my property for 27 months commencing October 2016. The agent's T & C means the tenant has to pay 6 months rent in advance from which he (the agent) will take his 27 months of commission of 10% directly from this advance thus leaving me with a very limited cash flow for quite a while. In order to alleviate this cash flow problem I have suggested that I put in a 12 month break clause so that the agent's is limited to only 12 months commission being prepaid. He is not happy with this and is suggesting that the tenant wont agree as the tenant wants to be guaranteed of staying in the property for the full 27 months. The agent has hinted that I may lose the tenant. Would you advise I accept a NO break clause? I am not sure what the law is regarding time scale for evicting a tenant (should it ever get to this) where the tenant has prepaid 6 months in advance and has a no break clause in the 27 term contract.

    Secondly the agent has suggested that I should settle on the agreed rent and not leave any room for an increase in the 27 months as the tenant wont accept this. Would you advise I accept having no rent increase?

    Thirdly the agent is saying that he wont allow a  commission refund should  the tenant terminate early from an initial term which has been agreed. He says the clause to offer me a rebate on the commission paid will be in my tenants contract. In the early termination clause in the contract the outgoing tenant would be liable to pay this advance commission to me but if I were unable to recover any advance commission paid upfront they would, and as a goodwill gesture, offer me a pro rata rebate from any commission paid for the point rent hasn't been paid and up to the end of the original contract. Is this pro rata rebate a legal procedure for estate agents or should I demand the full 100% rebate should the tenant terminate. Also what if I choose to terminate the contract early from the initial term? What is the law regarding my pre paid commission rebate in this instance?

    Many thanks.

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    Hi Ash,

    I don't know the law that well at the moment, so I wouldn't like to comment, but I would not agree to the agent taking their full comission at the start of the tenancy agreement.  I would find another agent.  I don't understand why they would suggest that, it doesn't sound right to me.  They wouldn't have any incentive to conduct their management duties efficiently over the next 2 years.

    I would have no problem agreeing to the 'no rent increase' during the 27 months as the agreement works out well for you and the tenant; you knowing your BTL will be occupied for the next 2 years.

    Just my thoughts, hope it helps.

    Andy

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    Andy Walker

    Creator of monoperty.com

    Follow Me: YouTube LinkedIn Facebook Twitter

    If you get paid on a monthly basis, then so should the agent.

    Decline the services of this agent, and go it alone, if possible,

    Never forget, in all guises, an agent is parasitic.

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    Get rid of this agent - he is a CONMAN ! You would only need one thing to sign up to this agreement - insanity.

    Don't ever give a tenant more than a six month agreement. It is very difficult to get rid of them before the end of the agreement. As for the agent giving you a long list of what the tenant will and will not allow, this is beyond ridiculous. It is your property.

    Taking six months rent up front could lead to this money being treated as a deposit, making you liable for returning up to four times this amount to the tenant. So, you could end up with a tenant who pays no rent after the first six months, he then sues you for four times six months rent, and you have paid the agent TWENTY SEVEN TIMES ten percent  for the privilege ! You couldn't make it  up, though perhaps Stephen  King could.

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    As everyone has said,  dump this agent as fast as you can.  What a moron.

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    As others have said, this sounds extremely dodgy for too many reasons to itemise and I would just walk away if I were you.

    See - How to vet a lettings agent 

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    Don't walk  RUN. Show Ussain Bolt how it is done.

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    Agreed with all the above. Everything he suggests may be "legal", but it sure isn't the commercial position you want to be in - even leaving aside the (in my view very significant) risk that you are being conned.

    I would second the Usain Bolt suggestion.

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    Thanks everyone for your advice. It's a London agency and they are sticking to their T & C so I will opt to ditch them and use another.



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