Areader e-mails in to tell me my columns are topical “and at times, witty”. Maybe he is not reading them carefully enough. Anyway, his real reason for writing is a much bigger issue, namely “repetitive commission charges by agents”.

Renewal fees, in other words: that bone of contention wherein the agent again charges a percentage of the rent to the landlord, if the tenant signs for another 12 months. My correspondent, Christopher Pitts, feels — and he is not alone in this — that the charging of such fees is “unjust enrichment”.

Pitts, a retired accountant in his eighties, has three flats, and a house, all in London, with a total value of about £3m. “My house in Westminster is currently being let out for £1,250 a week, unfurnished,” he says.

Hamptons, who found Pitts a tenant but does not manage the house, charged him 10% of the rent for the first 12 months: “Plus Vat. Plus charges for inventories and contracts, and so on. Then when my tenant expressed an interest in staying, I found I had to pay them again.

Another 10%! The repeat fee comes to just over £8,000.

“I have already paid for the introduction of this tenant. It’s a duplication of charges, and I consider it in breach of the Unfair Contract Terms Act,” he says. “If my tenant does stay on, I will try the Office of Fair Trading. All the agents do the same thing. But I think it should be made illegal. It’s money for old rope.”

I call Hamptons, which agrees that it charges 10% renewal fees, and has no further comment to make regarding Pitts and his views.

I then call another local agency, London Property Rentals, and speak to Lionel Robert, the owner.

“It’s complicated,” says Robert. “If we sign up a landlord who has multiple properties, we charge lower commission than usual, probably about 8%. If there is a renewal after 12 months, this goes down to 7%.

But if a landlord has just one property, the commission stays at 10%. Any reduction for the second year? “No, we still charge 10% for the second year.”

But don’t you think that’s unfair? “No,” Robert says. “Usually we have negotiated a good renewal term, namely an increase in rent, so the landlord is quite happy. Rental increases are written into our contracts.

“Generally, all our rents go up by between 3% and 8% in the second year. If landlords don’t like the fact that we should be renumerated for our efforts in getting a good rent, we won’t take them on board again.”

Elsewhere, rental renewal schemes vary. Ludlow Thompson, the online London estate agency, charges 10% commission for tenant-finding (not management) for the first year, and 9% commission for subsequent years; while Bushells, which has 12 branches in south London, charges 10% for the first year, 5% for the second year, and nothing for subsequent years if you keep the same tenants.

Hunters estate agency, which has 10 branches in the north of England, charges a flat fee of £450, plus Vat, for finding your tenant if the rent is less than £800 a month; in the second and subsequent years this drops to £65, plus Vat. Meanwhile Morgans, in Leeds, charges 7.5% of the rental as a finding fee in the first year and 3.75% thereafter.

Obviously, the more properties you own, the bigger your muscle. Marcus Lock is a veritable Schwarzenegger of a landlord, as he has 50 properties in southwest London, with a total value of about £15m. He manages them all himself and simply refuses to pay renewal fees.

“I’m happy to pay the commission for the first 12 months, but I am not prepared to pay renewal fees,” says Lock. “I think if I do a good job and look after my tenant, then my reward is that they want to stay on.

“I have a renewal rate of 70%, and if I had to pay another round of fees it would make a huge difference to my cash flow. And, let’s be honest, after introducing the tenant, agents do bugger all.”

“I hear this argument time and time again,” says Marc von Grundherr at Benham & Reeves Residential Lettings. “I understand it, but 73% of our tenants stay for a second year, sometimes more. One of our tenants has stayed in the same property for 19 years. Do we go on charging renewal fees? Of course we do. And the owner comes in every year, gives us a bottle of wine, and shakes our hand. He’s never had a void. He’s never had to decorate. He’s never had to do anything.”

As von Grundherr sees it, if renewal fees are to go, they will simply be replaced by two things. First, longer contracts. “There is nothing stopping you doing a one, two- or three-year lease,” he says. “Some tenants want to sign a five-year lease. How much would we be entitled to in fees then?

“The agent’s interest will also shift from keeping tenants in situ for the long term, to moving them,” he says. “At the end of every year, they will call tenants and physically try to remove them, by offering them a better deal down the road.”

I ask Lock about this. “If they think they can tempt my tenants away, go ahead,” he says. “I don’t put up my rents after 12 months. I’ve established a good relationship with my tenants. I’m comfortable with the product I offer.”

What did you do before you were an öber-landlord running rings around lettings agents, Mr Lock? “I was a lettings agent.” Ah.

buytolet@sunday-times.co.uk

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