Can my letting agent charge me another 7 per cent commission?

PROPERTY CLINIC: Can my letting agent charge me another 7% commission to rent my buy-to-let flat to the same tenant after a year?

  • Always check the contract with your lettings agent before you sign it
  • The contract sets out what payments are due and when, so there is transparency

I let my buy-to-let flat through an agent on a one-year tenancy agreement and paid them 7 per cent commission for references etc. Now the agreement is about to end in a month’s time and the tenant wants to renew for another year. 

My lettings agent tells me I have to pay 7 per cent commission for a new one-year agreement. Is this correct?

Letting agents usually insist on landlords signing an agreement before finding a tenant

MailOnline Property expert Myra Butterworth replies: It is may be tempting to sign up to a letting agent without reading your contractual agreement with them. 

After all, your motivation for using their services may be to save you time and money, so why would you want to spend time reading through the small print of their contract.

The problem is that the contract is king and it is imperative that you understand what you are signing up to.

Many letting agents will provide different types of landlord services. For example, they may start with a basic service that simply finds you a tenant and carries out the checks with no on-going management once the tenant has moved in.

More advanced letting contracts will include day-to-day management of the property, including insurance and legal cover should things go wrong. 

These types of contracts tend to be more expensive and letting agents will charge a higher percentage of the month rent for such contracts with landlords.

Hopefully your contract will reveal what services you have signed up for and what commission you are expected to pay, including on renewal. 

The contract set out what payments are due and when, so there is clarity and transparency

The contract set out what payments are due and when, so there is clarity and transparency

Jeremy Leaf, of estate and letting agency Jeremy Leaf & Co, replies: Letting agents usually insist on landlords signing an agreement before finding a tenant.

This should set out all the details of the contract, what payments are due and when, so there is clarity and transparency. It should also reduce the risk of disputes of this nature occurring.

If you have signed the terms and conditions but there is no reference to renewal commission in there, then it would seem the letting agent doesn’t have a leg to stand on in trying to charge a 7 per cent renewal fee. 

However, check the details carefully – they may not have highlighted the charge but included it in the small print of the document you signed.

The payment of renewal commission is certainly an ‘industry standard’ as administrative and sometimes other work is involved but the amount can vary considerably – or could even be waived in certain circumstances.

In this instance, I would advise seeking independent specialist legal advice as soon as possible.

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