Landlords have successfully challenged a claim for renewal commission by agents who demanded payment despite the fact they did not negotiate the contract.
The judge found in favour of the landlords, despite the fact that details of the agents’ 6.5% renewals fee – and its terms – were included in documents they signed at the outset of the tenancy.
The case was brought by the agents, who were claiming for renewal commission for the seventh year of the tenancy of a maisonette.
The figure was £1,123 at 6.5% (including VAT) of the annual rent of £14,040 issued in the county court. A 7% commission had been paid on the initial letting, with a 6.5% charge on all future renewals.
However, in the seventh year renewal the landlords dealt directly with the tenant, negotiating the rent directly with them and completing a standard form of AST directly with them. The agents did not manage the property, or collect the rent and never carried out any work regarding the renewal.
Despite this, the agents claimed they were due the commission because their fees, terms and conditions entitled them to it, whether or not they carried out any work.
Paragraph 8 of their fees document included the clause: “Renewal commission becomes due in full whether a renewal agreement is signed or not when all or one of the original tenants remains in occupation. Commission is due whether or not the renewal is negotiated by the agents.”
However, at the hearing at Willesden County Court, the judge dismissed the claim on the basis that although the fees, terms and conditions document was signed by the landlords, the fact that the agents would claim the renewal commission whether or not they did any work was not flagged up on the first page of the document where the fee was mentioned.
John Miller, of Miller Clayton, which acted on behalf of the landlords said: “In my opinion, it is unreasonable and unfair for agents to charge a renewal commission at a percentage near to the percentage charged on the initial letting after the fourth year of renewal, especially if they had not carried out any work towards completion of the renewal terms.
“Even if they did, only a reasonable administration fee should be charged.”