Everyone dislikes fees of any kind, but Landlords have always had a special disdain for Agent's Tenancy Renewal fees. They all know that the agents are going to include them in their original agreement; the trick is to make sure you negotiate the rate with the agent before signing and not waiting until the tenant is about to move in.
The renewal fee is charged at a rate of anywhere from 50% to 100% of the original commission and is there in the event that a tenant decides to renew his tenancy agreement. This fee could amount to several pounds for drawing up a new tenancy agreement.
There are a great number of Letting Agents which means that the competition is quite fierce amongst them. It would not be in their best interest to be charging more than everyone else, so they tend to stick with the going rate. They know that you would just go to the next letting agent on the list to find you a tenant, if they weren't happy with the commission rates set out on your agreement.
Of course if there were no renewal fees, the original commission would most likely be higher and unless you got lucky and found tenants that were going to stick around for more than the usual one year, you'd be paying this higher commission on a constant basis. So if you look at it this way, having the renewal fees spread out over the length of the tenancy is the better way to go.
As previously stated, the best time to negotiate the terms and conditions of your letting agents agreement, would be prior to the signing of the agreement and before the tenant is about to move in. Since the renewal fee rate is usually buried in a paragraph somewhere in the body of the agreement, its best to know what you're looking for so that you are prepared to address and negotiate the percentage rate. By addressing the issue at this stage you have a couple of things going for you. The Letting Agent won't want to waste time haggling over a few percentage points, especially since he knows that it's unlikely the tenant will renew anyway. Also, they won't want to lose the time they've put into finding the tenant, only to have you walk away to find an agent that's more flexible.
Although I'm sure most landlords would prefer to have the renewal fees waived altogether, all of the well-established agents are charging them, so being fair is in the best interest of everyone involved. Not getting the proper exposure by going with an agent willing to go with a small percentage could cost you dearly in the end if the property goes without a tenant even for a short time. So choose an agent that has a fair renewal fee, see if you can negotiate slightly and aim for about half of the original commission rate.
When you're going through the terms and conditions of your letting agent's agreement, you should also be looking at the sales commission rate he wants to charge should the tenant, or any associated party, ever go on to purchase the property. Most agreements include this information and the agents generally insert their standard sales commission rate (which is not to say this is the rate that they ever receive) into the agreement. It goes without saying that the same rules of negotiation should apply prior to signing as that of re-negotiation renewal fees.
James Vince is the creator of Letting Links, a free to use website that connects local UK tenants and landlords. Letting Links is an innovative website that allows members communication capabilities, interactive networking and custom search options.
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