What are letting agents obligations to Landlords & Tenants
Letting agents’ obligations for the service they provide are towards landlords and tenants in equal measure.
Although this article refers to letting agents much of it is relevant to real estate agents too.
Rent arrears, faulty legal advice, failure to properly process prospective tenants, failing in legal responsibilities, incorrect tenant credit checks, failing to register the deposit, incorrect money payment to the landlord and failing to follow the code of practice these are just some of the complaints against letting agents from landlords well as tenants.
Rent arrears related issue seem to the most common cause of complaints against letting agents.
Under common law (England), letting agents have the following responsibilities towards landlords:
- To make landlords aware in writing the services & products provided with a clear indication of the fee before acting for the landlord.
- To make the landlords aware of the statutory and legal contractual obligations.
- To maintain a separate client account
- To process tenant credit & referencing
- To adhere to the agreed terms of business
- To store keys for the let property securely.
- To comply with GDPR
- Efficiently managing viewings and feedback
Do letting agents have a duty of care to tenants?
Yes, they do under common law. It is worth noting the Tenant Fees Bill is now made law, letting agents no longer charge fees to tenants for their services and products.
The Ombudsman’s view on Obligations?
The Property Ombudsman has said they would accept complaints from tenants and or landlords, and any necessary award would be made under the redress scheme for qualifying cases.
The ‘neighbour’ principle
Donoghue v. Stevenson case is an interesting case. It is about a lady who fell ill after consuming ginger beer from a bottle. The bottle contained a decomposing snail.
Her claim was in essence that she was entitled to compensation even though she was not the one who purchased the ginger beer.
Further her claim was not made against the shopkeeper who initially sold the ginger beer. The claim was made against the manufacturer.
The judgment was given by Lord Atkin, who used the ‘neighbour’ principle to determine whether someone owes a duty of care. He said:
You must take reasonable care to avoid acts or omissions you can reasonably foresee would likely injure your neighbour. So, who in law, is my neighbour?
The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions called in question.
Agents’ obligations to Tenants and prospective tenants
Agents have a duty of care towards tenants, even though they do not have a contractual relationship. The duty of care includes:
- Advising and providing essential information relating to the let property.
- Providing prospective tenants information on charges the right to cancel and the right to the cooling-off period.
- Providing all information & documents regarding the deposit & protection.
- Ensuring the prospective tenants understand the tenancy, the letting process and access to and or opportunity to seek advice before entering any contract.
- Letting agents must provide gas safety records, electrical EICR and all other documents as per the current legislation.
Letting agent Codes of Practice
Letting agents should use good practices, procedures and the efficient process should be adopted. These organisations can help towards this goal:
Letting agents who are members of one of the above organisations should follow the prescribed codes of practice.
Codes of practice ensure that letting agents comply with legislation and adopt best practice.
Letting agents are required to belong to an independent redress scheme. This is mandatory for members of NAEA and ARLA.
Breaches of the code of practice or code of conduct may lead to a letting agent having their membership terminated.
NAEA and ARLA ensure their members adhere to the highest standards in the letting industry. Landlords or tenants unhappy with a letting agent’s conduct can file a complaint with the relevant professional body.
You should check to see which organisation the agent belongs to; this can be done by visiting their website or checking their letterhead.
Personal Interest and Connected Persons
It is a requirement that agents advise all parties in writing if they have a personal interest in the subject property.
They are required to disclose anyone who could be considered a ‘connected person’ to the agent or agency.
Should I use a letting agent or rent my property myself?
This is a major decision with some serious considerations.
To manage the let property yourself will affect a landlord’s quality of life. Essentially it is profit margin versus time to deal with letting yourself.
Let’s consider the difference between using a letting agent or renting a property out yourself?
Managing the let property yourself has the advantage that you retain control of your rental property. However, the downside is you’re on call day and night.
Letting agents can manage landlords’ responsibilities, saving them time, albeit it will cost anything between 10% to 15% commission.
With a raft of recent legislation especially due to COVID-19 landlords must be aware of all of their legal obligations.
It could be costly if you make a mistake diminishing any saving you make by going it alone. Landlords who manage their own property should belong to an association.
Landlords’ associations like the British Landlords Association (The BLA) is free and they provide free legal advice and free documents too.
To let your property yourself or using an agent does depend on the personal circumstances of each landlord.
Can my agent sign the tenancy agreement on behalf of the landlord?
Generally, it is the letting agent who signs the tenancy agreement on behalf of the landlord. The blog from Landlord Advice UK reveals 95.3% of letting agents sign the tenancy agreement on behalf of the landlord.
However, it is essential to note that this depends on the contract between the landlord and the letting agent.
Most contracts will give permission for the agent to have the right to sign the tenancy agreement on behalf of the landlord.
The tenancy agreement between tenant and landlord is still valid if signed by the letting agent.
Author: Simon Hampton [email protected]
Date: 4th of April 2021
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