Re-let fee still applicable even if new tenant is found?

GlobalSun

Hi all,

I am looking at a new lease at the moment and it stipulates that the re-let fee still applies even if I find a new tenant to replace me. The penalties are as follows if the full term is not completed:

- Re-let fee of 6% the annual rent + 23% VAT, applicable even if I find a replacement
- Registration with RTB €90
- Plus, rent liability 100% until the property is re-let

Sounds bit much to me.

Any advice is appreciated.

godtabh

i dont think they can charge the RTB fee.

Mrs OBumble

GlobalSun wrote: »

- Re-let fee of 6% the annual rent + 23% VAT, applicable even if I find a replacement

This bit is potentially very large.

I'd walk away.

GlobalSun

GlobalSun wrote: »

Hi all,

I am looking at a new lease at the moment and it stipulates that the re-let fee still applies even if I find a new tenant to replace me. The penalties are as follows if the full term is not completed:

- Re-let fee of 6% the annual rent + 23% VAT, applicable even if I find a replacement
- Registration with RTB €90
- Plus, rent liability 100% until the property is re-let

Sounds bit much to me.

Any advice is appreciated.

Best,
Assia

There's a bit of ambiguity with your post.

a) re-let fee........So if you leave at any stage during the lease, you've to fork over 6% of the annual rent + VAT, even if they do not have to re-let it at all and you find a replacement to take up the lease? That sounds complete bonkers to me. I've never heard of a re-let fee. I was a landlord for 12 years and never even thought of passing such a fee on. It's only €50 or something to list an ad on daft. To get it cleaned is another €150, max, so we're talking 200 quid.

€1500 rent x 12 months = €18k x 6% = €1080 plus VAT @21% = €1300
Anybody who willingly agrees to hand over 1300 snots to someone for the privilege of sitting on their hole while you find them a new tenant is an amadán of the highest order. (FYI, if the rent is €2k per month, the re-let fee would be €1750).



b) Registration with the RTB is free if you have to do it again within a 12 month period of your last registration. If you have to do it outside of that, you can claim some of it back via tax break. I've also never heard of a landlord passing this charge on.


c) If you're in a fixed term lease and want to break it, you can find a replacement tenant to take over the lease. It's called assigning the lease. Whether or not the LL finds that person acceptable matters Sweet Fcuk All to you and your obligations as a tenant. If you find someone, offer them as your replacement, and the LL refuses, you are free to break the lease without penalty.......then the LL cannot charge you a penny, no matter how much of the lease is left.


Further thoughts:
You say you are looking at a new lease. Do you mean a new tenancy? i.e. are you living there at the moment and you've come to the end of your lease and want to sign a new one, or do you live in property A and are thinking of moving to property B, which has all these extra charges?

If you are already living there, and have been for more than 6 months, the landlord is obliged to offer you an extension of your current lease up to a max of 6 years. This extension has to be the same terms and conditions, except for it allows an updated rent review (if the LL wishes). They cannot introduce all these extras on top. Plus any review must comply with RPZ legislation.

You should also be aware that any contracts, including letting agreements, cannot supercede your statutory rights. Even if you agree and sign something that says you're liable for rent until such time as a new tenant is found, you're legally not and there's not a judge in the land who'd disagree with you. If you wanted to be sneaky, you could sign the lease, wait until 6 months pass, then when you have Part 4 tenancy, tell him that stuff is unenforceable and you won't be complying with any of it.

That's asking for trouble, though. To be honest it sounds like this LL is a shyster, looking to extract monies to which they have no right. You'll be badgered about any/all of these extra covenants and I'd wager a month's rent you'll be blue in the face trying to get them to spend a penny of their own money on the property, should anything go wrong.

There's more red flags here than at a Chinese military parade. Don't walk away. Run. Run away, very quickly.

GlobalSun

Thank you, all. I definitely felt as though these clauses are a pure rip-off.

It is a brand new lease, for a brand new apartment I haven't moved into yet.

The property is managed by an agency, so the reletting fee which should be forked by the owner will be my burden in case of early termination. The rent payment until the new tenant is found, whilst understandable, is an extreme clause during these times when the rental market is quite volatile and finding a new tenant can be a real issue. I would understand if forfeiting my deposit was the actual penalty, but reletting fee even if I find the tenant myself + RTB fee + paying rent until the new tenant is found is too much of a rip off. I'd wind up paying about €5K to get myself out the lease.

I actually rang the agency first thing this morning before seeing the above responses and advised them that I was interested in the property, but after review of the contract the special provisions as listed above were not a fit for me. I specifically emphasized on the fact that such clauses are too restrictive during COVID times as anything can happen and it would place an unrealistic heavy burden on any tenant, especially during these times. The letting agent agreed and told me they would check with the owner as to whether a month-to-month lease or Part 4 could be an option instead. Even though she didn't mention this, I have a feeling entering a month-to-month lease would trigger additional burdens (e.g: increased deposit or rent to make up for any potential losses).

I haven't heard back from them, but I think I won't go for this property. The owner isn't even a private individual, but a larger corporation. I will think about it tonight, but I might pass altogether. Sounds like they want to lock people in. My current apartment is a disgrace with a shocking LL, but I lease I have the freedom to terminate my tenancy without any penalties.

GlobalSun

Update:

I spoke to the agency and they agreed to move forward with a Part 4 Tenancy (no Fixed Term) to alleviate the fees indicated above. They sent me an amended contract which clearly stipulates that this is not a Fixed Term tenancy, but instead a Part 4 Tenancy, 6 year Cycle.

The lease is a 14 pages lease which refers to the Residential Tenancies Act for both fixed term & Part 4. My issue is that the clause that caused the above doubts has not been eradicated. The Special Provisions still read: "If the tenant should not complete the full term of this fixed term lease, resulting in the property becoming vacant, they will be liable for the associated costs of reletting the property. These will include the re-let fee which is calculated at 6% annual rent +23% VAT; the cost of re-registering the property with the RTB €90; rent payments up until such time as the property is re-let".

Whilst I can appreciate they specifically stipulated somewhere at the beginning of the lease that this is not a fixed term lease and the RT Act applies instead, I am not sure why they let this clause in. They basically didn't amend the contract at all, just removed the fixed-term dates.

Am I crazy in thinking they didn't leave these clauses unintentionally and are seeking to twist their interpretation when time comes?

Thanks,

davindub

GlobalSun wrote: »

Update:

I spoke to the agency and they agreed to move forward with a Part 4 Tenancy (no Fixed Term) to alleviate the fees indicated above. They sent me an amended contract which clearly stipulates that this is not a Fixed Term tenancy, but instead a Part 4 Tenancy, 6 year Cycle.

The lease is a 14 pages lease which refers to the Residential Tenancies Act for both fixed term & Part 4. My issue is that the clause that caused the above doubts has not been eradicated. The Special Provisions still read: "If the tenant should not complete the full term of this fixed term lease, resulting in the property becoming vacant, they will be liable for the associated costs of reletting the property. These will include the re-let fee which is calculated at 6% annual rent +23% VAT; the cost of re-registering the property with the RTB €90; rent payments up until such time as the property is re-let".

Whilst I can appreciate they specifically stipulated somewhere at the beginning of the lease that this is not a fixed term lease and the RT Act applies instead, I am not sure why they let this clause in. They basically didn't amend the contract at all, just removed the fixed-term dates.

Am I crazy in thinking they didn't leave these clauses unintentionally and are seeking to twist their interpretation when time comes?

Thanks,

If there is no fixed term, the term is not relevant.

I would say offhand, the agent inserted that term without legal advice.

GlobalSun

davindub wrote: »

If there is no fixed term, the term is not relevant.

I would say offhand, the agent inserted that term without legal advice.

Thank you.

That was my first thought as well (4 years of law under my belt and feel like they served no purpose sometimes).

Yeah, I don't think they sought legal advice at all. They probably left it to their secretary or assistant to handle.

davindub

GlobalSun wrote: »

Thank you.

That was my first thought as well (4 years of law under my belt and feel like they served no purpose sometimes).

Yeah, I don't think they sought legal advice at all. They probably left it to their secretary or assistant to handle.

https://www.flac.ie/assets/files/pdf/landlord_and_tenant2016.pdf

The link is not a bad guide to use, it is a little dated but it does give opinions on some of the more miss-understood parts of the RTA and where the RTA has not legislated for.

Penalty clauses are not mentioned, but you might remember "penalty clauses" from contract law and you can compare the agents clause to the established tests.

Unfortunately, I have encountered a number of leases based on templates sourced online with additional terms inserted by the user (usually in a "special provisions" section) & the template content is often complete garbage to begin with. The above clause I suspect to be such an example, given that there are methods to break a fixed term lease using the RTA in certain circumstances.

Claw Hammer

davindub wrote: »

https://www.flac.ie/assets/files/pdf/landlord_and_tenant2016.pdf

The link is not a bad guide to use, it is a little dated but it does give opinions on some of the more miss-understood parts of the RTA and where the RTA has not legislated for.

Penalty clauses are not mentioned, but you might remember "penalty clauses" from contract law and you can compare the agents clause to the established tests.

Unfortunately, I have encountered a number of leases based on templates sourced online with additional terms inserted by the user (usually in a "special provisions" section) & the template content is often complete garbage to begin with. The above clause I suspect to be such an example, given that there are methods to break a fixed term lease using the RTA in certain circumstances.

It is effectively a liquidated damages clause. The landlord will be charged again for the re-letting. The agent has to go through reference checking and anti- money-laundering in respect of the new tenant. It is extra work and expense occasioned by the tenant breaking the contract. That said if the tenant goes to the RTB, the RTB are more likely to take the tenants side.

davindub

Claw Hammer wrote: »

It is effectively a liquidated damages clause. The landlord will be charged again for the re-letting. The agent has to go through reference checking and anti- money-laundering in respect of the new tenant. It is extra work and expense occasioned by the tenant breaking the contract. That said if the tenant goes to the RTB, the RTB are more likely to take the tenants side.

The wording does contradict the RTA so I would say there is no doubt the RTB will refuse to enforce.

In regards penalty clauses (I didn't comment further as it is irrelevant, but certainly tenants should be aware of the legal position of clauses), you might examine the reasons you have given for the re-let fee being an unavoidable cost to the landlord, aside from the fee being discretionary by practice, there are situations where the tenant can break a fixed term lease without penalty.

Also, the RTB registration fee is not payable on every registration as the clause suggests.

I'm not going to render an opinion either way on the enforceability of a clause which allows scope for profit.

On a side note and not related to the above, a landlord is not an designated person for AML. I don't even think letting of property for a landlord comes under the scope although there are bodies who would conduct activities that would bring them into scope whilst the activity itself would not? I'm not an expert in AML & beyond my own requirements I haven't looked at it in detail but it does strictly say property services means buying / selling?

Claw Hammer

davindub wrote: »

T I don't even think letting of property for a landlord comes under the scope although there are bodies who would conduct activities that would bring them into scope whilst the activity itself would not? I'm not an expert in AML & beyond my own requirements I haven't looked at it in detail but it does strictly say property services means buying / selling?

An agent is bound to comply with anti-money laundering when letting property. In 2016 the PSRA was designated as the State competent authority for property service providers. Property service includes letting. If the customer (tenant) is going to pay more than 15K as a result of the letting AML procedures apply.

davindub

Claw Hammer wrote: »

An agent is bound to comply with anti-money laundering when letting property. In 2016 the PSRA was designated as the State competent authority for property service providers. Property service includes letting. If the customer (tenant) is going to pay more than 15K as a result of the letting AML procedures apply.

The acts do not mention letting when defining property service provider. Can you deal with that specific point?

Claw Hammer

davindub wrote: »

The acts do not mention letting when defining property service provider. Can you deal with that specific point?

Property services act 2011
“property service” means the provision, for consideration, in the State, in respect of property located within or outside the State, of any of the following—

(a) the auction of property other than land,

(b) the purchase or sale, by whatever means, of land,

(c) the letting of land (including a letting in conacre or for the purposes of agistment), or

(d) property management services,

davindub

Claw Hammer wrote: »

Property services act 2011
“property service” means the provision, for consideration, in the State, in respect of property located within or outside the State, of any of the following—

(a) the auction of property other than land,

(b) the purchase or sale, by whatever means, of land,

(c) the letting of land (including a letting in conacre or for the purposes of agistment), or

(d) property management services,

That is not the AML act..

Claw Hammer

davindub wrote: »

That is not the AML act..

The Property registration authority obliges agents to follow AML procedures in respect of lettings

davindub

Claw Hammer wrote: »

The Property registration authority obliges agents to follow AML procedures in respect of lettings

Obliges as in how?

How did you come by this information?

Claw Hammer

davindub wrote: »

Obliges as in how?

How did you come by this information?

The can refuse to renew the licence of the agent does not comply with their directions, thus obliging the agent to carry out AML procedures. .

davindub

Claw Hammer wrote: »

The can refuse to renew the licence of the agent does not comply with their directions, thus obliging the agent to carry out AML procedures. .

Getting silly now, either provide the source or stop. I don't know the PSRA but offhand I would say that a requirement to conduct AML on tenants would be written down somewhere.

Claw Hammer

davindub wrote: »

Getting silly now, either provide the source or stop. I don't know the PSRA but offhand I would say that a requirement to conduct AML on tenants would be written down somewhere.

Ever heard of Google?
http://www.psr.ie/en/psra/pages/wp18000002

davindub

Claw Hammer wrote: »

Ever heard of Google?
http://www.psr.ie/en/psra/pages/wp18000002

Obviously. Here is another method for you, ask someone who actually knows?

Claw Hammer

davindub wrote: »

Obviously. Here is another method for you, ask someone who actually knows?

Why don't you try either method so, instead of quibbling?