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Letting and managing agents


If you decide to get help with letting or managing your property, there are three potential options, although the services will vary from agent to agent:

A) Letting only
This is where an agent markets the property,  advises on rent levels, finds a tenant, undertakes reference checks if required, and provides a tenancy agreement. Once the tenancy has started, the owner (landlord) undertakes all management of the property. The agent charges the landlord a fee for this. The amount will vary but is usually based on the rent, often it will be one month’s rent.

They may also charge the tenant an administration fee. You need to agree what deposit is to be collected, and ensure it is held in accordance with statutory tenancy deposit protection measures.

B) Letting and rent collection
This option is where the agent finds a tenant but also collects the rent during the tenancy. Other management functions such as repairs and arranging to get possession of the property at the end of a tenancy, if needed, are still dealt with by the landlord. The agent is likely to charge a fee and then a monthly fee (a percentage of the rent, perhaps 5% to 10%) for collecting the rent. This is a good option if you are unsure of the process for dealing with rent arrears.

C) Full management
This option is for the agent to act as a full managing agent. As well as all of the above, they deal with all management issues, repairs, rent collection, starting the tenancy and some steps towards ending the tenancy. For example, they may serve notice but not take court action. This is obviously more expensive (perhaps 10% to 15% of the rent), but it is worthwhile if the property owner either does not have the time to manage the property, or lacks the expertise. You need to agree with the agent what repairs they can do without asking you, and what repairs you want to get involved in. As the owner you are still responsible for the property.

>> The relationship between the landlord and 'agent'

The landlord agrees (expressly or by implied consent) that the agent should act on their behalf in legal relations with third parties (in housing this is the tenant, and any other party that the agent needs to deal with in managing a property, for example workers undertaking repairs).The agent also agrees to act on the landlord’s behalf.

>> The liability of the landlord where an agent is used

Where an agent is used, actions carried out by the agent on the landlord’s behalf are treated in law as if they had been done by the landlord. Landlords are bound by any agreement or contract made by their agent on their behalf with a third party (i.e. a tenant).
If the agent agrees to something which the landlord had not authorised, the landlord is still bound by the agent’s action, unless it is something obviously outside the authority of a normal agent in these circumstances.
This means, for example, that if the agent is acting as managing agent for the property and fails to carry out a statutory duty, such as ensuring an annual gas safety inspection  is carried out, the landlord will be held liable for the failure as well. A landlord will also be ultimately liable to the tenant for the return of the damage deposit and will be obliged to pay this to the tenant, for example if the agent were to go bankrupt or abscond with the money.

In view of this, you should be very careful when choosing an agent, and choose one who will carry out their responsibilities properly. You should also be very clear when giving agents any special instructions (such as ‘no pets’) preferably putting these in writing.

>> The liability of the agent in agency agreements

If If the agent has acted contrary to instructions (for example allowing pets where the landlord specifically said ‘no pets’)
it is likely that the agent will be liable to the landlord for anylosses which  may follow from this. Liability may depend
on, amongst other things, the precise instructions from the landlord and subsequent correspondence or conversations.

An agent may be personally liable to the tenant if the agent has not told the tenant that they are acting for a third party and the tenant believes the agent to be the landlord. The agent is also liable in respect of claims for the damage deposit money where the agent has held this as ‘stakeholder’.

Agents and notice to quit
Agents can validly serve possession and other notices
on behalf of their landlords. Also a notice to quit served on a landlord’s agent by a tenant will normally be considered validly served.

Agents and court claims
Although they can deal with the notice element of recovering possession, agents should not initiate legal proceedings on behalf of landlords without their knowledge. Also, agents are not entitled to sign claim forms for possession proceedings even if they hold power of attorney. Only litigants or their solicitors are able to sign these. The fact that a claim form is signed by a letting agent is a common reason for the rejection of claims by the county court. It is generally best for you to deal with any court proceedings which may arise yourself. Even if you wish to delegate much of this to the agent to deal with, it is prudent to keep aware of what  is happening as you will be potentially liable to the other party, for example for costs, if the claim is not successful.

>> Defining responsibilities in the contract

If you enter into an agreement with an agent, you should get a written contract (or Terms of Business) from them indicating what level of service they are offering, and their agreed fees. It is important to read the whole contract and discuss any points you are not satisfied with before signing. The contract should also define who is responsible for ensuring the property complies with the relevant safety standards and who will apply for a property licence if appropriate. You also need to agree how you can terminate the contract for any reason, including if you want to take over management yourself.

>> How to choose an agent

Investigate the agent. It is worth trying to get a personal recommendation (your local landlords association may be helpful here). Check how long the company has been in business, how many premises they manage, what training their staff have received, and whether they are a member of a professional or trade organisation such as:
• The Association of Residential Letting Agents (ARLA)
• National Approved Lettings Scheme (NALS)
• Royal Institute of Chartered  Surveyors (RICS)
• The Housing Ombudsman  Service (HOS)
• The Bristol Association of Letting and Managing
Agents (BALMA)
• UK Association of Letting Agents (UKALA)
• SAFE Agent

>> Redress Scheme for agents

It is compulsory for all letting agents to sign up to a redress scheme. This allows complaints about poor service or hidden fees to be independently examined, and where a complaint is upheld, compensation  will be awarded.

There are a number of recognised schemes for more information see www.gov.uk

>> Questions to ask your agent

• What are your fees? What are they for and when are they payable?
• What are your fees to tenants?
• How will you advertise and market the property?
Do you have a database of waiting tenants who are emailed/texted whenever a suitable property comes up?
• On average, how long does it take you to let a property, and when do you start marketing it once
the tenant gives notice? (You want to avoid an empty property between tenancies on which you may have to pay full council tax.)
• Do you do credit checks? What are your referencing procedures? Can I see the references? (Some agents will argue that you can’t, for data protection reasons, but it could mean they haven’t done the checks in the first place.)
• How often do you visit the properties? (Three months is normal, but some agents check after the first month.)
• How do you handle emergencies? Do you have an out of hours line for tenants to call?
• How do you handle maintenance and repairs, and do you have trusted contractors?
• Do you have client money protection?

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