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Question

Deposits and Tenancy Deposit Schemes (England)

Transfer of letting management and deposit protection scheme

2 Dec 2016 | 3 comments

I have let my property for the last 7 years, and would like to change letting agency due to poor service. I fear my contract with them won’t let me. Here is the relevant clause:

In the event that this agreement is is cancelled by yourselves prior to the arranging of a Tenancy an administration charge of £x is payable, If the agreement is cancelled during the period of tenancy with a tenant in occupation, then full management fees will be payable until the end of the occupation / lease with that tenant, whichever is the longer.

This means:
The tenant always belongs to
To end the contractual arrangement with the tenant must have moved out of the property.
– The property will need to be completely empty (unless rented as furnished)
– will need to be able to check the tenant out of the property
– All utility bills will need to have been closed / finalised
If during tenancy you wish to take over the tenant then a charge of £1000 plus VAT will be payable.

I know I was a fool to sign the above. For brevity I won’t go into it. The tenants are reasonable and unlikely to leave.

Do you think there is any way I can get out of this contract? I wondered if I could take the tenant over and then perhaps further down the line appoint a new agent, as I live a long way from my property. The truth is I’ve had to organise most maintenance and repairs myself the last 7 years.

The contract commits them to nothing.
Assuming there is any possibility, I do not really understand the position about the deposits. I believe it’s held with the mydeposits scheme, but I confess I don’t understand whether the agent is holding it, or a third party is. Do you have some reference material that might help me to understand it?

Answer

3 Comments

  1. VB_Landlord

    I fell victim to html! I had put ‘letting agency name’ in acute brackets and it is invisible on the page. The contract states the tenant belongs to the letting agency. And to end the contractual arrangement with the letting agency, the tenant must have moved out…et etc

  2. guildy

    This could be difficult to get out of depending on your situation.

    If you are operating as a business then the Consumer Rights Act 2015 wouldn’t apply. If however, you are a “consumer” then any term in a standard contract (such as the one you signed) must be “fair”. In my view, locking somebody potentially for life wouldn’t be a fair term.

    In a Foxtons case which contained a similar clause, Foxtons made an out of court settlement by changing their term to a minimum two years after which notice could be given. Unfortunately that doesn’t set a precedent because it wasn’t ruled on by the court. However, they must have been worried otherwise they wouldn’t have changed the term at all.

    As I say though, that protection is only available between traders and consumers and doesn’t apply where its business to business.

    At what point a landlord becomes a business for the purpose of the legislation is not clear although the number of properties they let will be a factor (so if only one that is likely to be a consumer relationship).

    Otherwise, if you are saying they have not provided a good service, if you could find some breach of the contract from their side, that would possibly allow you to also not have to comply with that clause and therefore give notice.

    In respect of unprotecting a deposit mid-tenancy, please see this article.

  3. JungleProperty

    We helped a landlord client out of a very similar situation a few years ago and at one point the agent threatened legal action against the landlord. We took legal advice and drafted a letter for the landlord to sign and send to the agent. I don’t have the letter to hand right now but basically our stance was (rightly or wrongly) a termination fee that is a) not an adequate reflection of the actual costs incurred by the agent in terminating the contract aka penalty b) not explicitly pointed out to you when you signed the contract is an unfair term and therefore not enforceable. In a court of law the agent may well argue ‘it’s in the contract you signed’ but would they want the cost/bad press/risk of losing (after all they have this in EVERY client contract so have a lot to lose) ? I would suggest not so this large agent backed down and released the landlord without further ado. Good luck.

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