Can anyone shed light on this part of my landlord contract?

[stirling]

Hi,
I've got an overly keen estate agent on my back to get the renewal of the current contract for my tenants up and running - I'm being bombarded with emails. Tenancy due to expire in August but tenants would like to stay on. They're confused as to why the one year contract doesn't move onto a "rolling" contract past the one year mark. I know it's because the agents are keen to get their claws into another £2000 from me.
Am I legally obliged to renew with the agent or can I do it on my own? Tenants have been very good and I seem to trust they'll continue to be ok.

The only wording in my contract that might tie me up to my agent seems to be this:

1.6.3 If on coming to the end of the fixed term agreed above, the landlord does not seek possession and the Tenant remains in the property, they will be considered, by virtue of section 5 of the housing act 1988 to have a statutory periodic tenancy. This will continue till ended by either party.

Can anyone explain to me in simple terms what that means? Many many thanks in advance.

That's an extract from the tenancy agreement. The clause just sets out the legal position for your tenants' tenancy. Neither they nor you need to sign another fixed term agreement. The tenancy continues on what is often referred to as a rolling basis. The downside is that you don't have the security of a fixed term of rental income. The upside is flexibility for both you and the tenants and no renewal fees to pay the agent.

The agent won't like this as they won't get a renewal fee from you or the tenant.

However this is separate from any management agreement you have with them. Did you not sign a separate (much shorter) agreement with them regarding their services?

You do not have to sign another contract. I assume that the £2000 you pay the agency is the fees for fully managed. It does seem rather high. Are you renting a mansion? The agency I use charge 10% of the rent collected for fully managed and 5% of rent collection if you do rent collection only.

Rolling tenancy means tenants notice to you is one month, yours to them is two months. No fix on rent. If you and they are both happy , no reason not to do it.

If you want to jettison your agent, that's between you and them and the agreement you signed with the agent .

I think that passage you quote actually supports the tenants going onto a rolling tenancy. But agree you need to check your contract with the agency.

I'd play innocent and just tell the agency you're happy for the tenants to go onto a rolling tenancy and see what they say. It'll give you a measure of their integrity too.

This is so helpful! I did laugh about whether or not I'm renting a mansion! It's a 1 bed flat, tiny. Believe it or not, that's literally the introduction fee only - I manage it myself.
Actually it's more like 2300, I just rounded to the nearest thousand. They do so little to deserve it other than being situated in a prime location.

I didn't sign a shorter contract - never have done. Just this one.
Might then be able to take my kids away for a few days!

I think you've misunderstood me on the shorter contract. What is your contractual agreement with the agent? You must have one. Did they send you their terms and conditions when you first approached them?

I advise you to check because you may have to give them notice to get shot of them, even if they only deal with renewals.

Our letting agent insists on three months notice to be shot of them. However if you have already paid an introduction fee then you may well be under no legal commitment. Are you doing the rent collection?

Thank you both, I'll make an enquiry now. Worried that they'll say something to rope me in - I'll try to ask for evidence in writing. I collect the rent, yes. They show prospective tenants, introduce and carry out searches on the tenants before signing an agreement.

Thanks

Tell the agency that you do not need their services.

I am aghast at £2000 being an introduction fee. In my area agents charge £250 as an introduction fee. Does the 2K include insurance?

If your tenants are happy and you are happy then I suggest you let the AST become a periodic contract. There is no need to do credit checks or referencing for tenants who have rented from you for a year.

For your information there are compancies like rent4sure that can do all the background and credit checks for you if you ever need to find new tenants. Obviously finding the time to do the viewings might be hard.

Which deposit protection scheme are you using? I changed letting agency and I had to send proof of ownership of the property to get a login for the DPS. Letting agencies don't have to put real money into a deposit protection scheme. Your tenant's contract should state which deposit protection scheme the agency has chosen.

Thanks Reallytired, I have spoken to the agent and eventually - after a long struggle to coax me into signing a new contract, I got it out of him that if I don't renew, I'm not liable for payment
Apparently under the terms of business that I've signed at some point I'm liable for a renewal fee. I've been blindly paying that in the past ten years. Don't think I was cut out to be a landlord. I've tons of other costs - service management fees for the building are 3k.

I also use the DPS. The fee is 8% of the annual rent. I've bartered that down from 11%. I'm aware of those companies that run checks, just don't know where how to advertise for the kind of tenants I usually have living there. ( mostly city bankers or doctors - central London hospitals) I know there are online companies but not sure if popular - attract much interest.

The flat is located v close to all the bars / restaurants on Upper St, Angel, London. The agents along Upper Street are v swish looking - think they attract young working professionals more than a website would. But I'm not entirely sure.

The DPS is free for landlords if you choose a custodial scheme. You only pay a percentage if the agency is using an insured scheme. I suggest you contact the DPS and get the deposit transferred into custodial scheme where you and the tenant have the ID. If the agency refuse to hand over the money then they will be expelled from the scheme.

Unlike private landlords an agency has the option of using an insured scheme rather than a custodial scheme. The agency pays a fee to cover the costs of their chosen deposit protection provider. If an agency misbehaves the deposit protection provider can expel them. This article explains how tenants and landlords have unwittingly been left with their deposits unprotected. Both landlord and tenant risk loosing thousands.

www.channel4.com/news/daniel-burton-landlord-deposits-mydeposit-unida-tenancy-protection

Gosh- 8% of rent for DPS?
We use the one that's 'free' but offers no interest on the deposit amount. It's been fine.

I hope you haven't paid this agent any money. Their behaviour is ridiculous. I own two rental properties just outside London and our agency would never behave in this manner. We use the agency for finding tenants and rent collection. They charge 5% of rent collected. They also charge fees for doing the check in, check out, making an inventory, but it's still less than £200.

Is your agent ALRA registered?

Hi, sorry - think I wasn't very clear when typing. Tenants deposits are locked up via the DPS.

On a separate point - I pay the letting agent 8% for finding a tenant. It's 8% of the annual rent. I hate it. But everyone else along Upper Street are charging more. A friend has a flat nearby, he uses an agent that's not located on the high street - doesn't get as many viewings though...and has empty periods... That kind of thing makes me stay put :(

Ah, right, makes more sense!