It was around 2007 that I came up with the idea of a fair and transparent lettings and property management business, aimed primarily at people in the Armed Forces.
At the time, fairness and transparency in the industry were in short supply. Agents could pluck fees out of thin air; extortionate tenant charges, renewal fees, undisclosed referral fees… I could go on.
So, in 2010 I incorporated Proudhouse Property Management, and by late 2013 we started trading, with fairness and transparency right at the core of our ethos. Uptake was good: 50 landlords and managed properties in the first couple of years. But it wasn’t quite as strong as I’d hoped.
Why? Because many landlords wanted to switch to us but agents were making it too difficult and too expensive to transfer.
The main barrier was ‘renewal fees’, often equal to a full month’s rent, charged every year that a tenant (originally sourced by the agent) remained in the property. This was regardless of who was now managing the property. In effect, landlords were paying for a service that was no longer being delivered. Agents would justify this by claiming they were “renewing the tenancy”, even when renewal wasn’t mandatory, and often wasn’t even happening in practice.
At Proudhouse, we helped landlords extract themselves from these awkward tie-ins. And surprisingly, it was often quite straightforward when you knew how (more on that later).
Thankfully, renewal fees are now outdated, and largely seem to be falling by the wayside, a trend likely to continue with the Renters’ Rights Bill, given the way tenancies are set to change.
But, as ever, the murkier side of the industry never fails to come up with something new.
And that something is: Exit Fees.
Have you ever heard of anything so ridiculous? A kind of sting in the tail: you terminate a service, no longer receive anything… and then get charged for not having it anymore.
And perhaps more absurdly, how do agents who charge exit fees genuinely expect to have a good reputation, gain referrals, or receive repeat business when that’s the note they end the relationship on?
Are you being charged an exit fee?
Let me first distinguish between something contractually reasonable, and something that’s not. When agents take on a new property, their upfront fees are often relatively low because they usually expect to cover their costs in the first 6 months and begin making a profit after that through ongoing management. So if a client leaves early, there may be some legitimate cause for the agent to recover losses; that’s not what I’m talking about here.
I’m talking about a fee slapped on a client after a year or more, purely because the landlord no longer wants the agent’s service. The tenancy might still be running. The service might be fine, or it might not. But now the agent is charging a penalty just for leaving.
In most cases, the client is leaving because they’re not happy with the service. The agent isn’t listening, and instead of addressing the issue, they impose an exit fee. It’s the final petty move, instead of offering an apology or a solution.
How to avoid (or escape) exit fees
- Don’t accept them in the first place When you’re first onboarding with an agent, they’ll likely be keen for your business, so negotiate. Ask for the exit fee clause to be removed or waived, and get that confirmed in writing as part of the service agreement.
- If you’re already under contract, look for breaches Did the agent carry out inspections as promised? Was the tenancy set up correctly? Have basic repairs been ignored? These are grounds to claim breach of contract and you don’t need a solicitor to make that point. If they won’t budge, issue a formal notice and escalate to the redress scheme the agent belongs to. If you have a legitimate claim and and a legitimate loss/grievance then you’ll win at no cost.
- Transfer to Proudhouse and let us help If you’re switching to us, we can help manage the process including communication with the outgoing agent. Remember: the landlord is the client. The agent works for you. That means you have the right to instruct them to stop visiting the property, to stop communicating with tenants, and even to stop collecting rent (if it’s being paid directly to you).
Summary
You may have more power than you realise.
At Proudhouse, transparency and fairness aren’t marketing buzzwords, they’re fundamental to how we work. Myself, Nicola, and the rest of the team are committed to helping landlords avoid the sting in the tail – and get the honest, straightforward service they deserve.
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