Home » How to terminate the management contract with your letting agents

How to terminate the management contract with your letting agents

landlord waving goodbye as she terminates the agreement with her letting agent

With landlords’ margins being squeezed by the increases in interest rates and inflation, not to mention Section 24 for unincorporated landlords, many are looking to save costs in 2024. One obvious way to save money is for landlords to manage their own properties themselves. However, if they already have letting agents in place, they’ll need to terminate the property management agreement.

Alternatively, or additionally, a landlord may be unhappy with the service levels that the letting agent provides. For instance, from serious issues like not doing inspections at the agreed intervals and failing to arrange repairs within a reasonable time, to poor communication.

Some agents will take this on the chin and agree to release the landlord without much fuss. However, others try to stop the landlords leaving by threatening to impose draconian termination penalties if the tenants are still living in the property.

In this blog post, I take an objective look at what landlords can do to terminate the management contract with their letting agents. I start with the perspective of letting agents, giving real examples of termination provisions, explaining when a break fee may be unenforceable, and discussing how to complain about poor service.

I draw on my experience of managing contract law disputes during my 25 years as a corporate lawyer, as well as my own interactions with letting agents as a landlord.

>> Related Post: How to self-manage your Buy to Let

>> Related Post: How to get efficiencies of scale with your buy to let portfolio

Why letting agents have termination provisions

paper with contract termination printed on it

Let’s start by looking at the perspective of letting agents, and consider why it might be fair for letting agents to have termination provisions in their contracts.

Letting agents provide two main service to landlords:

  1. Tenant find service
    • Letting agents find tenants for landlords for an up-front fee, and then hand over the management to the landlords.
    • As this is a one off payment, the landlord does not need to pay anything to the agent in year two, unless they’d like the agent to negotiate a new fixed term.
    • To take the example of Connells, they charge 10% + VAT of the projected rent for the tenancy to find tenants for a landlord.
  2. Full management service
    • As well as finding tenants for the landlord, the agent will typically collect rent, chase initial errors, carry out inspections, renew safety checks each year, and be the point of contact for the tenant.
    • The landlord will carry on paying this fee for so long as the tenant stays in the property. 
    • Connells charge 16% + VAT of the gross rent for this, paid monthly.
    • Some agents do also charge a separate “set up fee” for tenant find aspect. For instance Leaders charge the higher of £540 and 1.8 weeks’ rent inc VAT as a set up fee, as well as 15% + VAT of the gross rent for the management services.

The full management service involves a lot more work for the agent than a simple tenant find, so it’s only fair that the agent is paid more for this.

As agents deduct the relevant percentage fee from the rent for full management service each month, it would be unfair for a landlord to try to terminate the agreement with the agent in month 6, without some sort of termination payment. This is because the agent may not have not been paid for the full tenant find.

However, what is fair depends on whether the agent charges a setup fee for the tenant find when providing a full management service. That said, I believe it’s only reasonable for a letting agent to have termination provisions which require a landlord to pay the fees for the remaining period of that initial first term if they want to terminate for any reason other than the agent’s breach of contract.

>> Related Post: How to get the best out from letting agents

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Termination provisions in letting agent management agreements

man pointing out clause in contract fine print

It’s really important for landlords to study the fine print of the termination clauses in the agreements with letting agents as there are many different approaches. You’ll probably need to ask, as very few agents publish termination provisions on their websites as it’s not a legal requirement to include them.

However, it would be improve transparency if agents published termination provisions alongside the fees that they must provide on their websites under Section 83 Consumer Rights Act 2015.

The best time to avoid a dispute over termination is to make sure the termination provisions are fair before you sign up. If you’re not happy with their response, then go elsewhere. Landlords must read contracts before signing, and not just trust that it will be reasonable. Caveat emptor! (The buyer beware).

>> Related Post: What to look out for in the small print of letting agent contracts

When is a termination clause unreasonable and unfair?

Any term which seeks to tie in landlords to using their full management services significantly beyond the initial term is unreasonable, beyond needing to give a maximum of three months’ written notice. Just as tenants are free to leave a tenancy when the initial fixed term period expires, so should landlords.

If an agent is in breach of a material provision in the contract, the tenant may be able to terminate the agreement without being required to pay an exit fee or provide a long notice. See below for examples of breaches that may fall under this category.

An appropriate approach in this situation would be for the landlord to serve a notice of termination on the grounds of breach of contract, with the letter setting out the full details of the breaches, making clear that the contract is terminated with immediate effect. See the section on termination due to breach of contract below. However, the law is complex and you should obtain independent legal advice (and not rely on blogs!)

Some agents such as AST Lettings in Loughborough don’t charge landlords anything when if want to leave outside of the initial term. Instead, they focus on excellent customer service to encourage landlords to stay. I applaud this approach.

Instead of trying to use a stick to keep landlords, letting agents should use carrots. What are the carrots? Customer service that is so excellent that landlords won’t want to leave.

Although I’ve always self-managed my own properties, I used letting agents to find tenants for the first three years. I decided to start doing it myself when the service suddenly dropped, and it made me wonder what on earth I was paying for, when it was a lot of hassle dealing with them, and communication was so poor. I then started finding tenants using OpenRent. If I’d been happy, I’d probably still be with them.

Examples of termination provisions in letting agency contracts

Here are the contrasting approaches of three letting agents in Kent. They illustrate why it’s so important for landlords to study the terms and conditions closely before they sign up with a letting agent.

Best practice example of termination provision in letting agency contract

Knight Edmonds are a local estate agency in Maidstone with one branch. Not only do they publish their termination provisions on their website (see below), they also have what I consider to be a good approach to terminations.

Whilst they don’t permit a landlord to terminate during the Initial Term (which mirrors the concept of fixed term tenancies for tenants), landlords can terminate after the Initial Term by giving three months’ notice or three months’ fees. 

In my view, this is an approach that is both fair to the landlord and fair to the letting agent, and an example of best practice. 

Withdrawal fee during Initial Term:  Remainder of management fees for term.

Withdrawal fee outside Initial Term:  3 months notice or 3 months fees.”

Knight Edmonds (1 branch in Maidstone)

A fairly reasonable approach to allowing a landlord to terminate

Connells take a fairly reasonable approach, and allow landlords to terminate at any time by six months’ notice.

There’s no explicit term in the contract that allows landlords to terminate by paying six months’ fees as a lump sum. However, if the landlord wanted to terminate straight away, six months’ fees would put the agent in the same place they would have been, had the landlord served due notice. This means it’s likely to be seen as an appropriate amount if it went to court. 

Our Full Management or Rent Collection service may be terminated by 6 months written notice by either party. […] Either party may terminate if the other party fails to remedy promptly any breach of this Agreement.

Connells (180 branches in England)

Two months’ rent to terminate (plus VAT)…

At the other end of the continuum, Leaders charge two months’ rent plus VAT to terminate the agreement outside of a fixed term, when it is a statutory periodic tenancy.

As this is about one year’s worth of fees, it has the effect of penalising landlords who want to leave.

It’s also high compared to the let only fee, which is one month’s rent plus VAT.

“The Landlord may terminate the Agent’s Service by providing the Agent with not less than 1 month’s written notice but termination will only take effect upon any Tenant or Occupant vacating the Property following expiry and/or earlier termination or surrender of the Tenancy.

The Agent will be entitled to Fees at the agreed rate from the Landlord in respect of any Tenant or Occupant introduced by them for however long that same Tenant or Occupant remains in the Property whether or not the Agent negotiates the subsequent extensions of the initial term.

The Landlord will only be entitled to withdraw from the Agent’s services with the Tenant in situ when the Tenancy is a statutory periodic, in which event the Landlord shall pay the Agent a Withdrawal Fee equivalent to 2 months’ rent at the then current rate together with VAT thereon.

Any such notice of termination served by the Landlord is without prejudice to any claim for a breach of contract that either party might have against the other.”

Leaders (138 branches across England)

Guidance from Property Redress Scheme on Unfair Fees

The Property Redress Scheme has published Unfair Lettings Fees: A Guide for Agents and their Landlords which reminds letting agents that it’s unfair to charge cancellation fees if the landlord terminates the agreement for good reason.


Termination and Cancellation Fees


The Agent should provide clear instructions to potential Landlord clients on how any contracts are to be terminated and if the Landlord is to be liable for any fees for cancellation.

It may be unfair for an Agent to charge cancellation fees in circumstances where the Landlord has terminated the contract for good reason for example where the Agent has breached the contract or has not carried out services with reasonable care and skill.

What does The Property Ombudsman Code of Practice say about contracts?


Fair contracts

5j. Your Terms of Business must be transparent in relation to the landlord’s commitments and liabilities. They must be written in plain and intelligible language and comply with all requirements of Part 2 of the Consumer Rights Act 2015. You should not use terms that may be deemed unfair, and consequently unenforceable, by virtue of the above Act.

Are unfair termination terms and payments enforceable?

If high termination fees in an agency contract are “unfair”, Section 62 Consumer Rights Act 2015 says that they are not binding on a consumer. It doesn’t matter if the consumer signed a contract agreeing to the unfair terms; the letting agent cannot enforce it.

The booklet, Unfair Terms Explained, published by the Competition and Markets Authority (CMA) states: “Disproportionally high termination charges and over-lengthy notice periods can […] act to force consumers to continue with contracts, or renew them, when they have no wish to do so. They therefore have the potential to be unfair.”

This is because an onerous exit fee is a term which hasn’t been individually negotiated and (to use the wording from Section 62(6) Consumer Rights Act 2015) causes a “significant imbalance in the parties’ contractual rights and obligations, to the detriment of the consumer” (the landlord). As such, it is unenforceable if it’s an unfair term in a contract with a consumer.

In 2009, the Office of Fair Trading brought a case against Foxtons under consumer protection law, claiming that clauses relating to automatic renewal commissions, third party renewal commission (binding a purchasing landlord), and sales commissions (Foxtons had a clause charging 2.5% commission if the landlord sold to the tenant) were legally unfair. The OFT won, and sent this letter to letting agents afterwards. Both parties accepted that landlords were protected by consumer protection law.

The OFT Chief Executive said:

“This ruling sends out a clear and unambiguous message that businesses offering services need to ensure unexpected or surprising terms are not hidden away in small print. Contracts need to be written in clear and straightforward language with important provisions, particularly those which may disadvantage consumers as in this case, given prominence and actively brought to people’s attention.”

Termination provisions are rarely on agents’ websites, and are instead buried in the terms and conditions, like the renewal commissions in the Foxtons case.

It’s also possible to argue that these clauses are unenforceable penalty, as the fee is “exorbitant and extravagant”.

But, as always, it will turn on the facts of the case. Do take legal advice.

When is a landlord a consumer?

The next point is to consider whether a landlord is a consumer, as if they’re not, they have no legal protection against unfair contract terms in contracts with letting agents.

Section 2(3) Consumer Rights Act 2015 defines a consumer as “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession”. An individual means a human being, and not a legal entity, such as a limited company or a limited liability partnership. Section 2(4) states that is for the letting agent to prove that the individual “was not acting for purposes wholly or mainly outside the individual’s trade, business, craft or profession”.

It’s likely that an unincorporated landlord will be a consumer if they have another job or profession. On the other hand, they won’t be a consumer if they’re a full-time landlord running a business providing rental properties. The number of properties they have is not important; it’s whether being a landlord is their main business.

Importantly, landlords cannot be “consumers” for the purposes of consumer protection law if they own their properties through a limited company, regardless of whether they have another job or only own one buy to let. The fact they used a limited company to buy the property disqualifies them from consumer protection.

The CMA’s 2015 Guidance for lettings professionals on consumer protection law advises that letting agents should “comply consistently with the requirements of consumer protection law when dealing with all landlords, unless the landlord is clearly a corporate entity or running a business that lets out many properties”. 

What should landlords do about poor service from letting agents?

landlord complaining about problems with a letting agent

If a landlord is unhappy with the service their letting agent is providing both for a tenant find or ongoing property management, they should bring this to the attention of management informally. Often, landlords can nip issues in the bud.

However, if this doesn’t improve the service, landlords should make a formal complaint. Maybe the problem is limited to that branch or is part of a wider systemic issue. Either way, the landlord should give feedback to the letting agent in writing.

The landlord should ask the agency for their complaints procedure. All agents registered with The Property Ombudsman must have an in-house complaints procedure, and must provide a copy to a landlord or tenant on request. The Property Redress Scheme doesn’t require agents to have their own complaints procedure, so if the agent doesn’t have one, the landlord should send their complaint to the branch manager or the director/owner.

If the landlord is thinking of terminating because of the poor service, but wants to see the outcome of the complaint first, they should reserve their position in their letter of complaint. The letter should also remind the agency that they won’t be able to enforce a penalty where (to use the words of the Property Redress Scheme), the landlord is terminating “for good reason for example where the Agent has breached the contract or has not carried out services with reasonable care and skill”.

If the landlord actually wants to terminate as the service is so poor that it is in breach of contract, they should serve a notice of termination and also make a complaint.

When can a landlord terminate a letting agency agreement due to agent’s breach of contract?

A landlord may be able to terminate a letting agency agreement without serving a long notice peiror or paying an exit fee in the event that the letting agent has provided a materially poor service in breach of contract. The breach of contract must be so bad that it “frustrates the commercial purpose” of the contract, “goes to the root of the contract”, or “deprives the party not in default of substantially the whole benefit” of the contract. (See the Hong Kong Fir Shipping case in the Court of Appeal (1962).

Examples of material breaches that may justify termination by the landlord without paying the agent an exit fee or providing a notice period include:

  • The agent’s failure to seek to register the deposit and serve the prescribed information (including the signed deposit protection certificate) within 30 days.
  • The agent’s failure to arrange gas safety certificates before their expiry and serve them on the tenant, unless the tenant refused access and the agent made reasonable efforts to obtain access legally.
  • Missed or negligently performed inspections.
  • Breaches of the HMO Management Regulations where the property is an HMO.
  • Failing to comply with the terms of a mandatory licence, additional licence or selective licence as appropriate, where the agent manages the property.
  • Failing to follow up promptly and advise the landlord that there are signs the property is being used as an unlicensed HMO in breach of the Housing Act 2004.
  • Accessing the property for any reason without the tenant’s consent.
  • Breach of statute such as failing to advise the landlord of licensing requirements, so that the landlord is in breach of sections 72 or 95 Housing Act 2004.
  • Any conduct that exposes the landlord to the risk of a rent repayment order under the Housing and Planning Act 2016.

However, this is a complex area of law and you should tkake legal advice on your specific circumstances, and not rely on general advice in blog posts such as this! More details on my exclusion of liability are in my Terms of Use.

Outline landlord complaint letter to letting agent about poor service

Here is an example of a template letter of complaint that a landlord can adapt when writing to a letting agent about poor service that falls short of service that would allow the landlord to terminate the agreement for breach of contract.

I’ve drawn inspiration from the sample letters of both The Property Ombudsman and the Property Redress Scheme, and have added questions as prompts to help you write a well-structured letter. Not all of the questions will be relevant.

I’ve also included wording to reserve your position on whether or not to terminate and to claim damages for their breach of contract.

I’m providing this sample letter to be helpful, and am not providing legal advice. By all means take inspiration from the letter, but it is important to take your own legal advice as your own situation may mean this letter is not appropriate for you. More details on my exclusion of liability are in my Terms of Use.

>> Related Post: How to get the best out from letting agents

>> Related Post: How to find tenants without letting agents

Outline letter of complaint to letting agent about poor service

Dear [Title][Surname]

Formal letter complaint about management of [property address]

I am writing to make a complaint about the poor service I have received from [name of lettings agent and branch] in relation to the management of the above property. [If not a limited company or full-time landlord: Please be aware that I’m not a full-time landlord and don’t operate through a limited company, so I benefit from the protection afforded to consumers under the Consumer Rights Act 2015 in my dealings with you.]

Here are the details of my complaint:

1. [Short introduction to why you are unhappy with the service.]

2. [Summarise what the agent did or didn’t do, and why that has caused you loss, damage, breached the contract, infringed the law or infringed or the redress scheme code etc. Which of the agreed services did the agent not perform at all or perform badly? Give examples of how the agent did not carry out the services with due care and skill, and what they should have done instead]

3. [Refer to, and provide any copies of documents such as emails and complaints from the tenants to support your complaint (keep this relevant to the points made)]

4. [What solution are you looking for and when by?]

5. [Reservation of rights to terminate and claim damages: Although I am following your complaints procedure, I reserve my rights to terminate our agreement on the grounds of your breach of contract. I also do not waive any rights I may have for damages due to any breach of contract.]

[If agent is with the Property Redress Scheme: Please respond to this complaint by <date> [this should not be less than 7 working days and reflect agent’s own internal complaints procedure] in line with your complaints procedure. If you do not respond to this complaint or if I’m unhappy with the response, I will raise a complaint with the Property Redress Scheme.

I reserve my right to terminate the agreement if I have good reason to do so. To this end, I draw your attention to Unfair Lettings Fees; a Guide for Agents and their Landlords, published by the Property Redress Scheme, which states: “It may be unfair for an Agent to charge cancellation fees in circumstances where the Landlord has terminated the contract for good reason for example where the Agent has breached the contract or has not carried out services with reasonable care and skill”. I reserve the right to refer your handling of my right to terminate the agreement to the Property Redress Scheme]

[If agent is with The Property Ombudsman: Please acknowledge receipt of my letter/email within 3 working days and provide me with the written response to your investigations within 15 working days in accordance with The Property Ombudsman’s Code of Practice. If you do not respond to this complaint or if I’m unhappy with the response, I will raise a complaint with The Property Ombudsman.

I draw your attention to paragraph 5 of the Code of Practice of The Property Ombudsman regarding instructions, Terms of Business, fair contracts, fees, charges and termination and the requirement to comply with all legislation[, including the Consumer Rights Act 2015 – delete if not consumer landlord]. I reserve the right to refer your handling of my right to terminate the agreement to The Property Ombudsman if you breach any of the provisions of the Code of Practice, including without limitation paragraph 5.]

Yours sincerely

Outline notice of termination due to breach of contract with letting agent

Here is an example of a notice of termination that a Consequently, not all breaches of contract by a letting agent entitle a landlord to terminate an agreement. If the termination goes to court, the court would look at the nature and consequences of the breach to decide whether termination is justified. See above for examples of breaches that may be sufficiently serious to justify termination.

I’m providing this sample letter to be helpful, and am not providing legal advice. By all means take inspiration from the letter, but it is important to take your own legal advice as your own situation may mean this letter is not appropriate for you. More details on my exclusion of liability are in my Terms of Use.

Notice of termination for serious breach of contract

Dear [Title][Surname]

Notice of termination of agency agreement dated [date] regarding [property address]

I am writing to terminate the agency agreement between us regarding [property address] on the grounds that the service provided by your agency has been so poor that it breaches the contract in a material and fundamental way that goes to the root of the contract and frustrate the purpose of the agreement, ie the use of your agency to undertake the management of my rental property in accordance with the law. Consequently, I consider that I am terminating the agreement for good reason.

[If not a limited company or full-time landlord: Please be aware that I’m not a full-time landlord and don’t operate through a limited company, so I benefit from the protection afforded to consumers under the Consumer Rights Act 2015 in my dealings with you.]

Here are the details of why the poor service justifies this notice of termination :

1. [Short introduction to why you have been unhappy with the service, and why it is so bad that it justifies termination of the contract by you.]

2. [Summarise what the agent did or didn’t do, and why that has caused you loss, damage, breached the contract to a material extent, and infringed the law and/or fell short of your reasonable expectations of service to a material extent. Which of the agreed services did the agent not perform at all or perform badly? Give specific examples of how the agent did not carry out the services with due care and skill, and what they should have done instead. These should be serious, non-trivial examples.]

3. [Refer to, and provide any copies of documents such as emails and complaints from the tenants to support your argument that the service has been so bad it justifies termination (keep this relevant to the points made)]

[Reservation of rights to claim damages: In serving this notice of termination, I am not waiving any rights I may have for damages arising from your breach of contract.]

[If agent is with the Property Redress Scheme: I draw your attention to Unfair Lettings Fees; a Guide for Agents and their Landlords, published by the Property Redress Scheme, which states: “It may be unfair for an Agent to charge cancellation fees in circumstances where the Landlord has terminated the contract for good reason for example where the Agent has breached the contract or has not carried out services with reasonable care and skill”. I reserve the right to refer your handling of my right to terminate the agreement to the Property Redress Scheme.]

[If agent is with The Property Ombudsman: I draw your attention to paragraph 5 of the Code of Practice of The Property Ombudsman regarding instructions, Terms of Business, fair contracts, fees, charges and termination and the requirement to comply with all legislation[, including the Consumer Rights Act 2015 – delete if not consumer landlord]. I reserve the right to refer your handling of my right to terminate the agreement to The Property Ombudsman if you breach any of the provisions of the Code of Practice, including without limitation paragraph 5.]

Although I have the right to terminate the agreement forthwith, and do not waive my right to do so, in order to assure an orderly handover of the management of the property, I propose that the agency agreement terminates with effect from [insert sensible date eg the end of the current ment rental period, if monthly].

[Explain who will be taking over the management, ie yourself or a different letting agent. If the latter, insert details of the new agent].

Please could you acknowledge receipt of this letter and confirm the following within 3 working days:

I look forward to hearing from you within 3 working days of this letter. If you do not respond to confirm the above within 3 working days, please treat this letter as a letter of complaint, and if I do not receive a satisfactory response, I will escalate my complaint to your redress scheme.

Yours sincerely

Notice of termination to letting agent using contractual term

time to say good bye on typewriter

Many letting agents have fair terms in their agreements that allow landlords to terminate the agency agreement by the service of written notice, for instance three months’ notice after the end of the initial fixed term. These are like a Section 21 “no fault” notice where the landlord does not need to prove the agent is in breach of contract.

Assuming the contract includes such a provision, the landlord can serve a simple notice of termination along the lines of “Further to clause x, I am writing to give y notice to terminate our agreement to expire on z date.” Do also add the handover wording from the notice of termination for breach above.

What if there is an onerous termination fee or no termination clause?

If the contract has a draconian termination penalty along the lines of the Leaders’ one above, it’s more complex. Where the reason is due to poor service, the landlord should make a complaint. If the breach of contract is so serious that it warrants termination by the landlord, they should serve a notice of termination citing breach of contract, saying no cancellation fee is payable as a result (see above).

If the landlord wants to terminate for reasons that aren’t related to the service provided by the agent, and there is a draconian exit penalty, landlords should get legal advice on how enforceable the contractual penalty is if it’s not a genuine pre-estimate of loss. Also, try a less legalistic route in parallel by asking to speak to the manager, and appealing to their sense of reasonableness and fairness.

For landlords who don’t operate through a limited company and aren’t a full-time landlord, point out that you are a consumer and that unfair termination terms are not binding on you, citing Section 62(1) Consumer Rights Act 2015. If they threaten to “blacklist” you or take you to the small claims court, ask to go through their complaints process and escalate to the redress scheme if necessary. This is more evidence of the “significant imbalance in the parties’ rights and obligations”, and more evidence for your defence of their attempt to enforce an unfair term against you under consumer law.

It’s wrong for agents to charge a year’s worth of fees to release a landlord from a contract after the initial period (the equivalent of Leader’s exit fee). It’s not a genuine pre-estimate of loss by the agent, and is likely to be an unenforceable contractual penalty, even against limited companies. And for each year that ticks by after the tenant moves it, it becomes even more and more unreasonable to do anything other than let the landlord go, like AST Lettings do in Loughborough, without requiring the landlord to pay a termination fee.

Responsible letting agents should be fair and reasonable, and think of the long-term damage to their business if they have unhappy former customers complaining about them to other landlords.

Agents: do the right thing, and release the landlord with (say) a maximum of three months’ notice. Act fairly and reasonably, even when dealing with landlords who use limited companies.

Would the Renters Reform Bill change things?

The Renters Reform Bill promises to change the landscape for letting agents as much as landlords if it abolishes fixed term tenancies. Tenants would be able to give two months’ notice to quit at any time, and fixed term periods would no longer exist. Therefore, there won’t be an initial term of the tenancy to refer to in the agency agreement.

Landlords would no longer be able to tie in tenants for a fixed term period, and tenants would be free to come and go as they choose fit. This means landlords would need to work to retain tenants by providing excellent accommodation and excellent customer service.

Letting agents would need to adapt too. Whilst it would be possible for letting agents to replace the “initial term” wording with (say) “the earlier of 12 months or when the tenant terminates the tenancy”, their fee structures and termination provisions would need to reflect the brave new world we all face in the PRS. Otherwise, landlords will vote with their feet and use online agents like OpenRent to find tenants, and tenant management software to help manage their portfolios.

As of today’s date (25 March 2024) however, the Renters Reform Bill is stuck in. theHouse of Commons and may not receive Royal Assent by the General Election.

>> Related Post: The 10 key changes in the Renters Reform Bill

>> Related Post: How can landlords use technology to manage their portfolios?

Final thoughts

Just as responsible landlords treat their renters fairly, responsible letting agents should treat landlords fairly, regardless of whether the landlords are consumers.

Landlords also need to read the terms and conditions thoroughly, and either negotiate to have unfair terms removed (with the removal confirmed in writing), or refuse to do business with letting agents who insist on having unfair terms in their contracts.

Letting agents should increase transparency by including their terms of business / contract terms on their websites, along with the fees. They should also summarise any restrictions,

There are many letting agents who do offer fair terms, but landlords need to seek them out. Don’t just focus on the headline fee for management services, but always ask what the exit terms will be before engaging a letting agent. How letting agents treat landlords when they leave is a good indicator of their company ethos.

For 10 practical tips on what to do when you take over from your letting agents, read the related post below.

>> Related Post: Practical tips to take over management from your letting agents

how to terminate a management contract with letting agents with a landlord waving goodbye

23 thoughts on “How to terminate the management contract with your letting agents”

  1. It’s a really helpful piece blog post. I am happy that you just shared this usefᥙl info wіth us. Please keep us up to date like this. Thank you for sharing.

  2. Fantastic, Suzanne you have covered this issue perfectly. I hope other Landlords take your advice and don’t do like me. Read the agent’s terms of business carefully. I got myself in this mess because I didn’t want to see my tenants homeless. Thanks Suzanne once great job. Your hard work is truly appreciated.

  3. Hi Suzanne, many thanks for this excellent post. FYI I think there is a typo in the Outline letter of complaint to letting agent about poor service. I think it should say

    “so I benefit **from** the protection afforded to consumers under the Consumer Rights Act 2015 in my dealings with you”

  4. I have another variation – a contract with no exit terms at all. It simply states the management or rent collection fee is due as long as the tenants remain in the property – any number of years. I guess that would also be against consumer rights legislation (always assuming the landlord can be considered a consumer)?

      1. Should a landlord who finds himself unable to terminate the management agreement whilst the tenant remains in this circumstance go to the redress scheme first, before court if in this position or what is the most effective formal process, after numerous reasonable discussions with the ‘branch manager’ have failed? Any law firm(s) in the industry who are knowledgeable in this matter and would be able to advise / assist a landlord in terminating the letting agent’s agreement with this sort of unfair / unreasonable terminating clauses (or the lack thereof)?

  5. if landlord wishes to terminate contract with letting agent after 10 years , and the tenant renewal has just expired, will there still be a fee?

    1. It depends on the terms of the contract, but I think it would be highly unreasonable for the letting agent to charge a fee after 10 years. I suggest you give one month’s notice. Don’t get them to negotiate a new rent or a renewal as they’ll use that as an excuse to try to tie you i, If you’re an unincorporated landlord, say that one month’s notice is fair and reasonable under the circumstances. But this is just my view, and you should make your own decision,

  6. Hi

    Estate agent is management my three flats under one roof. They are saying i have to pay 5 weeks rent each flat + Vat. They found my tenants but the tenants are happy with me managing my property. What is the best way to go about it and avoid the steep fee’s and i have been doing there job for a year

    1. Take a look at your contract to see what the termination provisions say. If you own them through a limited company, you’ll have to go with what the contract says. If you own them in your own name and aren’t a full time landlord, you might be a “consumer landlord” and have some protection under the Consumer Rights Act. To be sure, it’s best to speak to a solicitor who specialises in this area and can advise you.

  7. Paul Ives c/o Letting Centre

    Hi Suzanne,
    I just came across your site and blog posts – especially this very pertinent one on termination of agency.

    I have a legal background and have been assisting an elderly friend to try and exit from her agency arrangement with Leaders. Complicated by the fact that my friend was having health problems – she has been undergoing surgery and other treatment for cancer. Leaders were aware of this yet they tried to enforce the two months’ rent rule in their agency agreement.

    This is a completely unacceptable and outrageous contractual term which in our case required that the landlord pay a penalty of 20 months management fees to exit the contract – even though we had come to the end of the original 12 month tenancy that they had set up, and that the landlord had paid Leaders generous setup fees at the beginning of the tenancy, and been a Leader’s client over 10 years. Given the agent’s fiduciary legal duty to his client, and the fact that Leaders by contrast do not specify any min exit period (except ‘reasonable’) and allow anything vague such as ‘breakdown in relationship’ to be used to extricate themselves from the agency, this is a very unfair clause in their contract which my friend would have felt unable to challenge without good legal knowledge and backup. In our friend’s case, Leaders delivered a very poor service which was why she was keen to leave, and it was clear to see that they have become a greedy very profit-focussed organisation with some very questionable business practices – the inclusion of such an unfair exit clause is an obvious demonstration of this.

    In our case, they continued to threaten to exercise the 2 month rent fee penalty, and started to bombard my friend with late rent messages from their credit control department, threatening legal action against her tenant, which she found quite troubling. This was happening despite terminating their agency. I only persuaded them to stop bullying my elderly friend with the threat of commencing an action through their professional association (PropertyMark) to have her (the letting managers) professional qualifications suspended through their standards committee.

    I am quite surprised, despite layers of regulation, deposit protection boards, Housing Ombudsmen etc that such a significant organisation is allowed to continue trading with such unfair terms. My advice to other landlords is to fight this inappropriate clause if you are in this unfortunate situation and have it examined by a judge in the Small Claims Court – which I understand from a Leaders insider rarely happens (Leaders generally cave in and give up after hassling the landlord for many months). I am also really surprised to hear that NRLA have entered into a commercial alliance with Leaders – did they not do any checks first ? Your blog on this topic is well researched and detailed – it will be very helpful to landlords fighting this one.

    1. Hi I am currently going through this problem with leaders and yet they didn’t find out tenants we already had them in the property before leaders took over management. Is it advisable to just stop using them if they won’t budge ? If I did would the tenants get their rent deposit back ? I’m at a lost at what to do as I don’t have the money to get legal advice

      1. You should be able to get the deposit transferred into your custodial account – speak to the company who holds the deposit. As for Leaders, you can go through the complaints procedure, and if you’re a “consumer landlord”, say that the terms are unfair, particularly in your case as they didn’t find the tenants. The NRLA helpline might be able to help?

        1. Thanks for the advice citizens advice said we are not classed as consumer landlord which I don’t understand as it’s my ex wife who rents the property out while she is living anf working abroad. I thought leaders were holding the deposit but I don’t know.

          1. I’m not sure that living and working abroad means that they’ve not a consumer. The act defines a consumer as “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession”. Citizens Advice aren’t solicitors and don’t always get it right. The burden of proof would be on the letting agent to prove the landlord isn’t a consumer.

            The deposit can be transferred – speak to the deposit scheme.

  8. John Drummond

    Hi there,

    I have been informed that a periodic tenancy arrangement fee has been charged despite me terminating my contract with the agents, as well cancelling the agreement with the tenants. The tenancy agreement end date fell after the 14 days from which I sent my termination email.

    Am I right in arguing for this fee to be returned to me?

    Thanks,
    John
    ***

    “Upon the tenancy becoming a statutory periodic tenancy or periodic
    tenancy (this is where the tenant remains in occupation without a new
    agreement) our fees, calculated as agreed in respect of the original letting,
    will be due annually in advance within 14 days of invoicing, together with
    the ‘periodic arrangement fee’ as set out in ‘Additional Charges’.”

    “Our sole agency relationship will continue indefinitely thereafter until or
    unless you give us 2 weeks’ notice in writing of your intention to appoint
    another agent.”

    1. I can’t give individual advice, but I would make a formal complaint, and escalate to the redress scheme if unhappy. This sort of practice gives decent letting agents a bad name.

  9. Hi I have rental property’s with Martin and Co. They have issued me with a new contract and increased their fee from 7.5 percent up to 10 percent I do not agree with this and do not want to sign the contact. I have been with them for over 10 years but the service has been bad. What will happen if I refuse to sign the contract? Can I leave them with no cost to myself?

    1. I can’t give legal advice to you, but on first principles, they can’t put up the price without giving you the opportunity to terminate as they need your agreement to change a fundamental term. Your contract may even give you the right to terminate in this situation.

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