The role of letting agents
/ Letting Guidance
If you are considering becoming a landlord for the first time you probably have a million and one questions to ask. One of the most common questions new landlords want the answer to, is whether to manage the property themselves or to get a letting agent involved.
When considering whether to employ a letting agent or not, it is worth finding out exactly what letting agents can do for you, and how they can help you manage your buy to let investment.
There are several options you can look at, there is ‘Letting Only’ which means the letting agent will find a tenant on your behalf and help you decide on the monthly rent. Then there is ‘Letting and Rent Collection’, which, as you’ve probably guessed, means the letting agent will find you a tenant and collect their rent on your behalf. In addition, there is the full management option, which means the letting agent does pretty much everything for you.
The first thing to always have in the back of your mind, is the letting agent is working on your behalf. You pay them for a service and (hopefully) they deliver it. Your tenant does not ‘belong’ to them, and if you are unhappy with their services, you can and should, be able to end the contract (especially if they do not do everything they promise to do in the contract) without losing your tenant.
You should always use a reputable letting agent, which sounds obvious enough but the internet is rife with forum postings by unhappy landlords that have been ‘shafted’ by bad letting agents. This is a huge shame for those letting agents that genuinely do a great job for their landlords as it gives the whole profession a bad name.
To find a good letting agent, you should go to The Association of Residential Letting Agents (ARLA) and search for a letting agent in your area. ARLA has a code of conduct that all their members are bound by which should give you peace of mind, and additionally helps safe-guard you against the few ‘bad eggs’ that unfortunately exist.
There are still some things for you to consider. There is the affiliation between you and the letting agent to understand. In the law, this relationship is termed ‘agency’. Any legal actions the agent makes on your behalf with your tenant or any contractors needed for repairs and maintenance you agree to. Reciprocally, the letting agent agrees to operate on your behalf. This agreement can be either be drawn up on paper or be a verbal agreement concluded from the manner business is conducted between the two parties. However, setting this out in a document will undoubtedly result in less confusion between you if anything does go awry.
Landlord liabilities when a letting agent is employed
When you use an agent, the law treats any actions they carry out on your behalf as though you have done them. If, in representing you the agent has acted according to the agreement you have between you the agent is not liable for any contracts entered into on your behalf.
If, on the other hand, the agent acts against your instructions, then the agent is likely to be liable to both you and the tenant for any losses accrued from their actions.
The landlord may still be liable if statutory duties are not carried by the letting agent You should check the terms laid out between the letting agent and yourself, to be sure who is responsible for what. You should also make a point of checking that all certification such as your annual gas safety certificate is valid and accurate, even when the letting agent is responsible for arranging this on your behalf.
This is why you must be careful when selecting a letting agent. You must make sure they are acting for your best interest as well as their own. The small print should be checked thoroughly to ensure there are no exclusions on the agents liability for negligence.
Additionally if you have any special requirements such as a no pets clause then you must make sure this is recorded in writing.
As the landlord you are responsible in law for the return of the tenant’s deposit. The landlord is also responsible for ensuring the deposit is protected under one of the three government backed schemes. For further information and guidance on deposit protection, visit our Tenancy Deposit Schemes page.
Notice to quit
One of the most common reasons claims for possession are rejected by the courts is because a letting agent has signed the statement of truth on the court forms instead of the landlord (claimant). The only people who can sign this are the landlord or their solicitors, not a letting agent.
If the tenant informs the agent of their intention to quit the property then this would normally be considered valid if the agent is specified in the tenancy agreement.
When entering into a relationship with a letting agent it is imperative that you make sure that a legally binding contract is drawn up. You must read it through thoroughly and talk over any particulars that need clarifying. If you are unsure of anything in the contract then don’t sign it until you are happy.
It is very important that the contract states what will happen if you decide to terminate the agreement either to use a different letting agent or to self-manage your property.
As with many things in life, it is vital to remember that the cheapest solution isn’t always the best one. Make sure your chosen letting agent has a proven track record in property management. Ask for references, if these are not forthcoming, then walk away. Remember in the law, the actions of your agent treated as your actions.
Before signing anything, get a friend to pretend to be a prospective tenant to see how the letting agent will treat your tenants. If nothing else, this will give you a clear idea of the way the letting agent operates ‘from the other side’. If any alarm bells start ringing, don’t sign anything.