Renewal Fees & Terms of Business

Published on Tuesday, 13 March 2012. Posted in Case Studies


After a 10 year relationship with the Agent, Mr and Ms G (the Landlords) decided to move the management of their two properties to another agent. Mr and Ms G provided the Agent with two months’ written notice of their intention, to which the Agent responded by advising them that they would be liable to pay ongoing renewal fees of 10% of the annual rent on the anniversary of each tenancy whilst the same tenants remained in the properties. The Agent also withheld one month’s rent from Mr and Ms G in lieu the unpaid fees.



The submissions provided by both parties revealed that, although the Agent had been taken over by another company during their relationship with Mr and Ms G, at no point were any written Terms of Business produced. The Agent acknowledged the omission but argued that, as their terms of engagement with Mr and Ms G had never been called into question during the previous 10 years, these were legally enforceable terms. However, it was also the case that the Agent’s file did not include any indication of what these terms were or any reference to renewal fees prior to termination of the relationship.


I commented that, even if a documented renewal clause which allowed the Agent to charge a perpetual fee had been in existence, as no ongoing fee earning activity was being provided, I would likely have considered it to be neither fair nor reasonable. I supported the
complaint and determined that the pursuit of renewal fees (and therefore the retention of rental monies) was unreasonable as the Agent had never provided Mr and Ms G with written Terms of Business which clearly set out the fees and charges. I directed the Agent to withdraw their renewal fee invoice and made an award of £1,370.26, which included the withheld rent and compensation for the aggravation, distress and inconvenience caused to Mr and Ms G.


Any charges which will become due must be actively flagged, in writing, to the client by the agent.