Agency Terms (Letting)
Published on 18 February 2017
Appointment of Agent
Unlike residential estate agency, there is no legislation covering the appointment of letting and management agents. Therefore, common law governs the relationship between the letting agent and their client (the landlord). Agents are usually appointed by:
- Express appointment; an agreement between a landlord and agent which may be oral or in writing. The latter is best practice.
- Ratification; a landlord ratifies the contract if they agree to a contract that an agent has already created without the landlord’s appointment
- Estoppel; the landlord is prevented (estopped) from denying an agreement has been made with an agent where the landlord indicated to a third party that the agent was acting on the landlord’s behalf, or
- Implication of law; this occurs when an agent has to act in an emergency as an agent of necessity.
The Agent’s Authority
Agents are authorised to carry out certain duties on the landlord’s behalf. To do more or less than what is authorised would be a breach of contract. The Landlord is bound by a contract made by an agent on their behalf, providing that the agent has the authority to do so.
Standard Agency Services
There are various degrees of service that an agent can offer to a landlord, from finding a tenant to full management. The actual services offered to landlords will vary according to the individual agency, as will the fee level and extra charges.
The agent usually markets the property, shows applicants around, takes references and draws up a tenancy agreement. The landlord may opt to pay an extra amount to draw up an inventory and conduct the tenant check-in. The agent has no further responsibilities once the tenancy starts.
Let and Rent Processing
In addition to the services of Introduction only above, once the tenants move in the agent is also responsible for:
- Taking and protecting the deposit
- Passing on rent received
- Providing rental statements to the landlord
- Writing to the tenants if they fall into arrears
- Accounting to HMRC, if appropriate.
Let and Management
This includes all of the previous services listed above plus:
- Dealing with day to day repairs and maintenance
- Renewal of gas and electric safety checks
- Transferring utility accounts
- Making periodic property visits
- Preparing a schedule of costs and damages at the end of the tenancy
- Negotiating between parties regarding any dispute over damages.
Under the Consumer Protection Regulations (CPRs) the agent should ensure that the landlord fully understands what they are getting in terms of service for the agreed fee under the agent’s terms of business.
Most disputes between landlords and tenants end up in the small claims court or a tribunal where an agent can represent a landlord.
Additional Agency Services
Various other services can be offered between and before tenancies, in the form of separate contractual agreements e.g. a pre-letting contract or obtaining consents.
Consents are required from mortgagees, freeholders/ head leaseholders and insurers before a landlord can let a property. A mortgage or freeholder could seek to repossess the landlord’s property if they fail to obtain consent to let.