Landlords Association Recent Landlord News How to Terminate a Contract with a letting agent

How to Terminate a Contract with a letting agent

how to terminate contract with letting agent 2020

There are three main reasons why a landlord may want to end a contract, with a letting agent: 

1 – To avoid letting agent fees, and save money. An increasing number of landlords are managing their own properties. 

2 – The relationship between the landlord and the agent has broken down, or the agent is not performing.

3 – The landlord wants to sell the property.

Landlords will generally have a signed contract, with the letting agent. Surprisingly, there are a few landlords who have a verbal agreement, with there agent. It is best to have a written contract; however, an oral contract is binding for both parties in law.   Your agreement, with your agent, is what you are obliged to abide by. If there is contention between the parties, the court will determine the matter.

How to end my letting agency contract?

Read the letting contract you have with your agent carefully. Look for the clause, which deals with the process, to terminate the agreement. Most contracts, between landlord and letting agents, will have clause’s dealing with termination. There should ideally be a formula, to deal with the agent fees, relating to termination.

If you are going to terminate your agreement with your letting agent, you will need to consider beforehand, who is going to manage the property?

You will need to give reasonable notice and negotiate compensation with your agent. 

You will need to obtain the following from your letting agent upon terminating the contract:

  • Deposit monies 
  • Any rent outstanding
  • Tenancy application form
  • Tenancy agreement
  • Deposit protection details
  • Gas check certificates
  • EPC certificates
  • How to rent guide

You will need to transfer management of the tenancy, to yourself, or another agent. 

If the agent is not going to hand over the documents, or you cannot amicably negotiate with the agent, you will have to consider the options below. 

Unless there is abysmal performance, and or blatant breaches of contract, by the agent, the agent can hold the landlord to the agreement.

One of the clauses, in the contract lettings agents, rely on, is the one, most landlords wish they had negotiated, before signing the contract. This clause will read something like: “so long as one of the original tenants, introduced by the agent to the landlord, is still in the property, the agent fee will be payable on-going, including on tenancy renewals“.

Court’s are generally unhappy with businesses, that tie consumers into an everlasting agreement. The saving grace, in some cases, maybe the statutory rules and codes of conduct, such as The Unfair Terms in Consumer Contracts Regulations 1999. If the matter does go to court, the judge will determine, if the contract between the parties and the terms therein are fair and reasonable.

Nearly all letting agents are members of a professional organisation. Check and see if your agent belongs to one of them listed below. If you are not happy with the conduct of your agent. you can consider complaining about them to the organisation.

Is your agent a member of an organisation?

  • The National Association of Estate Agents (NAEA)
  • The Royal Institution of Chartered Surveyors (RICS)
  • National Approved Lettings Scheme (NALS)
  • Association of Residential Letting Agents (ARLA)
  • The Property Ombudsman Service

Letting agents are legally required, to register with any one of the 3 redress schemes. This is to ensure tenants, landlords and leaseholders have an option to hold their agents to account. If you have a problem with your letting agent, you can complain to the redress scheme, and they will deal with the complaint.

The redress scheme came in on 1 October 2014. 

The scheme can help you solve a dispute, with your letting agents.

Once you have exhausted the agent’s internal complaints procedure, then you can consider taking the complaint to one of the schemes.

The letting agents are required by law, to state clearly which scheme they are members of. The three government-backed schemes are:

The Property Ombudsman (TPO)

Ombudsman Services Property (OSP)

The Property Redress Scheme (PRS)

A letting agent that is not registered with any of the above schemes, they can be fined. A local council can issue a fine of up to £5,000 to a letting agency that fails to join one of these schemes.

Termination Clause

Most letting agreements between the landlord and letting agent have a termination clause. The clause generally will stipulate a notice period, where anyone of the parties can terminate the contract.

Try to deal with the agent in a friendly and amicable way. See if an agreement can be reached say one-off fee, equivalent to an introduction fee. This could be like a three-month management fee equivalent.

These negotiations should be documented in writing, just in case, the dispute ends up in court. If a landlord has offered, what is considered a reasonable compensation by the court, for termination, this will help the landlord in court. 

As with all disputes, documentary evidence is crucial to winning a case. Make sure you keep all correspondence, emails and notes, of discussions with the agent.

Letting agents, generally, work hard and their fees are worth the work they do. 

With increasing regulations, the management of lettings, the right agent, is worth paying a reasonable fee to. 

Landlords need to be aware, of clauses in the contracts, that refer to excessive fees, or estate agency fees, to be paid in the event the landlord selling the property.

Author: Marc Attwater

Date: 10th of March 2020

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