Fee For Renewing Tenancy

[Kats]

I'm just in the process of renting a new flat and in the contract, there's a clause that says you have to pay the agency £60 towards the cost of any renewal document created for any extension to the tenancy. I am really not happy with this as I plan to be a long term tenant and don't want to pay these fees every 6 months/year. I advised the agency I would not agree to the cost and they told me it's non-negotiable.

I've never had to pay such a fee in 10 years of renting - what is everyone else's experience? Has anyone negotiated to have it left out of the contract if it's in there?

Another question, my contract is for 12 months and doesn't state what happens after that time. Will it automatically become a periodic tenancy when the fixed term ends even if it doesn't state this in the contract? Thanks for any help!

[Martaki]

I'm just in the process of renting a new flat and in the contract, there's a clause that says you have to pay the agency £60 towards the cost of any renewal document created for any extension to the tenancy. I am really not happy with this as I plan to be a long term tenant and don't want to pay these fees every 6 months/year. I advised the agency I would not agree to the cost and they told me it's non-negotiable.

I've never had to pay such a fee in 10 years of renting - what is everyone else's experience? Has anyone negotiated to have it left out of the contract if it's in there?

Another question, my contract is for 12 months and doesn't state what happens after that time. Will it automatically become a periodic tenancy when the fixed term ends even if it doesn't state this in the contract? Thanks for any help!

[Martaki]

We had the same issue and got around it by demanding a 12 month contract with a 2 month break clause from either landlord or tenant. At the end of 12 months the contract goes into an open rolling contract that perpetuates until either party activates the 2 month break. There is no renewal date and therefore no fee due.

The estate agent argued but we stuck to our guns and they relented.

Good luck

[Kats]

Thanks for your advice. The contract (which we haven't yet signed) says upon the expiry of this notice period (one month after 11 months for tenants, two months after 10 months for landlord) the Tenancy Agreement will cease. This leads me to think they will try to force us into another agreement (and therefore renewal fees) as after one year there will be no agreement.

[Martaki]

You will need a new contract. Its the same as the one you currently have but with a mutual break clause added rather than a renewal date. The agents use this contract to generate fees. The legal wording for the additional clause is below

"Notwithstanding the provisions contained within the tenancy particulars and relating to the term of the tenancy hereby created it is agreed that either party may terminate this agreement by giving to the other at least 2 months prior written notice of his intention to so do such notice to be delivered by hand or first class post and shall not expire before (date) at which time this tenancy shall determine absolutely but without prejudice to any claim by either party against the other in respect of any antecedent breach or non observance of the provisions of the agreement"

Below are the steps we took to get the contract we wanted. If they argue give them the legal clause wording above and demand these terms

1 Ask for an initial period of 12 months

2 After 12 months the contract will be broken by either party with 2 months notice

3 After 12 months the contract is open and rolling with no break. Other than either party giving 2 months notice.

4 Special clauses can be added such as a rent increase etc but they do not effect the renewal as there is no renewal

The landlord should also favour this approach as most agents charge a renewal fee on this side as well. Its basically just a cash collecting scam.

[Kats]

Thank you, that's really helpful. I will try to get the contract changed to that - I don't have high hopes as the agency is being really difficult but I will try!

[Martaki]

My advice stick to your guns. Other than the landlord being unhappy and why would he be. The only other arguement against the addition of the break clause is that we want to charge you regularly.................. need a brass neck to defend that position ;-)

[Damocles]

First, remember that unless the agent is a party to the tenancy agreement the agreement is with the landlord. That means that unless a benefit is conferred on the agent in accordance with the Contracts (Rights of Third Parties) Act 1999, the agent cannot enforce the obligation to pay the renewal fee directly. Only the landlord can do that and is surely unlikely to do it unless he is charged by the agent.

Secondly, there is an argument that the obligation cannot be enforced anyway. The obligation is contained in an agreement relating to a fixed term tenancy. When the fixed term ends (assuming no new fixed term has been agreed) a wholly new statutory tenancy arises. Accordingly, any new fixed term tenancy cannot be an extension of the original tenancy. All you would have to do therefore is to avoid agreeing an extension before the fixed term expired. In any event, when negotiating a renewal you can still argue about costs whatever the agreement says.

1 Ask for an initial period of 12 months

2 After 12 months the contract will be broken by either party with 2 months notice

3 After 12 months the contract is open and rolling with no break. Other than either party giving 2 months notice.

4 Special clauses can be added such as a rent increase etc but they do not effect the renewal as there is no renewal

You need to proceed with caution if you propose that, as at least some agents would have difficulty in drafting the provision correctly. It would, if drafted correctly, in fact create the slight oddity of a two-monthly periodic tenancy once the first 12 months had expired. Bear in mind that if you get your timing wrong you could find yourself having to give nearly four month's notice. On the whole it is best to keep things simple.

[Kats]

Thanks for your advice too. How common are these renewal fees? I've never come across them before in previous rentals.

[tim123]

Thanks for your advice too. How common are these renewal fees? I've never come across them before in previous rentals.

They are normal

what is not normal is writing the requirement into the original contract, they usually just spring it upon you at renewall time

tim

[Matt Henson]

Thanks for your advice too. How common are these renewal fees? I've never come across them before in previous rentals.

They are very common in London where letting agents continue to charge landlords re-letting fees for contract renewal after the initial fix term.

I would be careful with the advice offered by Martaki, because firstly if you ask for a 12 month contract, the LL has to pay 12 months of fees (rather than 6 months and then let the contract lapse to a SPT), secondly unless they issue a section 21 notice with the initial contract you tenancy will automatically become a statutory periodic tenancy at the end of the period and so you (with the agreement of the LL) can stay as long as you wish without ever renewing the contract.

If you do want a 12 month contract, I recommend a 6 month break clause with 2 months mutual notice period, once the contract ends the statutory notice is LL 2 months, Tenant 1 month (not the two months suggested below which would be unenforceable anyway)

I would also have a clause inserted that states something like; should the tenancy lapse in to a statutory periodic tenancy, then the LL cannot increase the rent for a period of 365 days after the initial term expires (it is a fairly standard clause)

[Kats]

We have asked for the lease to be changed to 18 months with a 12 month break clause (as this is what we initially discussed with the agent) and I think we will cross out the clause in the contract saying that we agree to pay the renewal fee. At least if we do end up having to pay a renewal fee it won't be for 18 months.