Key topics: Commission, fee transparency
Awards: £150 compensation for distress and to waive the additional commission invoice
Resolved by: Early resolution
What happened
The complainant said:
- there were a number of issues he experienced during the time the agent was managing the property
- the agent issued an invoice for extra commission which was never agreed
- he understood that the management agreement said 10% commission was payable and there was no record of an introductory rate or increase after a set time
- the agent just keeps sending reminders and has employed a debt collection agency but did not respond to his queries and attempts to resolve the issue
The agent responded, saying:
- the 10% commission was an introductory rate and only applied to the first 12 month tenancy that ended two years ago
- the landlord should have been charged the standard rate of 12.5% commission the year after but the rate increase was never applied
- the landlord was made aware of this change and had agreed to it in an email
- their invoice made it clear saying “Please find enclosed an invoice correcting commission rate on our management activity for the below property for the year ahead which is an increase from 10% to 12.5% as agreed in our management agreement.”
Evidence
Email correspondence, tenancy agreement, bank statements, management agreement.
What happened
- The management agreement signed by both parties referred to: “Management commission equivalent to 10% of the rental received for the first 12 months from the commencement of the tenancy or for the duration of the current tenancy (whichever is the longer) will be charged.”
- There was nothing in the agreement to suggest what was going to happen after the first 12 months
- The agent did not provide the email to confirm the landlord agreed to any rate change, saying that it had not been possible to extract emails from that specific time
- Other terms in the management agreement referred to the agent’s standard 12.5% commission rate but as the landlord was not made fully aware of the rate change in good time, the landlord should only pay 10% for the coming year and renegotiate well in advance of the next renewal.
- The agent was also found to have provided poor service by not responding to emails sent by the landlord
- The final decision was for the agent to:
- waive the additional commission fee invoice and provide proof that this had been done
- pay £150 compensation for poor communication
How to avoid this happening in future?
- Landlord’s should understand and be clear on what they are expected to pay before they sign a new or renewal contract with an agent
- Agents must communicate any changes in a reasonable time to make sure there are no surprise costs, for complete transparency
- Agents cannot introduce a new fee further along the line unless this is agreed to in writing with their client
- Agents should respond to emails in a reasonable time and be open to discussing any issues and finding solutions before engaging debt collectors
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