Residential Lettings - Guidance and Information
An agent must keep written records of keys held and inform tenants of any access required in accordance with the terms of the tenancy agreement, except in cases of genuine emergency.
When dealing with an agent landlords should ensure that they understand the services to be provided and that they are recorded in the agreement. Services range from finding a tenant, carrying out referencing, drafting a tenancy agreement, arranging an inventory, check-in, or for the rent collection and management of the tenancy thereafter.
It should be clear how long the agency agreement runs for; how it can be terminated, the notice required, and whether there is any continuing liability for any costs after it ends. The agents terms of business should include all fees and confirm whether they are a member of TPO or another redress scheme. When you sign the agreement you are entering into a legally binding contract under which you will incur a financial commitment.
Ensure that you have read and understood the terms of the agreement and understand the commitments you will be entering into with the agent. Do not feel pressured into signing and be aware that if you sign the document in your home or at your place of work you are entitled to cancel it within 14 days.
A break clause (or a ‘break option’ or ‘option to determine’) is a clause in a lease which provides the landlord or tenant with a right to terminate the lease before its contractual expiry date, if certain criteria are met.
Buy to Let
An investment decision to purchase a property with a view obtaining rental income as part of the return on the investment.
Wherever possible, to avoid a future dispute, you should verify, amend, sign, copy of the inventory or check-in report and return the document via registered post. Make sure it reflects the true condition as it may be used at the end of the tenancy should the deposit be disputed. When a tenancy comes to an end the agent or the landlord will arrange a check-out inspection comparing the condition of the property against an inventory and check-in report.
Any security deposit due under the tenancy agreement should be protected with an approved Tenancy Deposit Scheme. The deposit monies are the tenant's monies until agreed otherwise by the tenant or the tenancy deposit scheme. Deposits should not be used to pay fees owed to the agent by the landlord.
Duty of Care
An agent must always work in the best interests of the client, that is to say the person who is paying for the letting agency services (usually the landlord). The agent must also treat all those involved in the proposed renting or letting fairly, and with courtesy. If the agent or one of its staff has any personal or other business interest in the property, the landlord and the tenant must be informed at the earliest opportunity.
The Energy Assessor
By law any property that is to be let has to have an Energy Performance Certificate. The agent might assist landlords to find an Assessor.
More information concerning Energy Performance Certificates can be found here.
From 27 May 2015 letting and management agents are required to display a list of all fees, charges or penalties (however expressed) payable by landlords and tenants for any letting agency or property management service. This includes any additional fees, charges or penalties which may be incurred during a tenancy as well as fees, charges and penalties which are referenced in Tenancy Agreements and in Terms of Business. The only exceptions are tenancy security deposits (not holding deposits), rent payable to a landlord and fees, charges or penalties which the agent receives from a landlord under a tenancy on behalf of another person.
Where a prospective tenant is asked to pay a holding deposit, the agent must provide that person with a written receipt detailing the charges and fees that will be offset against the deposit (if any) and the terms of repayment or forfeiture should the tenancy not proceed. The agent should also explain the purpose of the payment (for example, removing the property from the market while references are being undertaken). Any deductions from the deposit must be reasonable and must take account of the specific circumstances of the situation and the services actually properly provided.
Illegal / Criminal Activity
Allegations of illegal and criminal activity (e.g. fraud) should be referred to the relevant authority (such as the police) or regulators (such as Trading Standards) who are empowered to undertake enforcement action. The Ombudsman does not have regulatory powers and cannot consider allegations of illegal or criminal activity.
The nature and frequency of inspections will be decided between the landlord and the agent. This will only apply if the landlord has a property management agreement with the agent. Tenants should be informed of access requirements in accordance with the tenancy agreement, except where there is a genuine emergency.
Where instructed by the landlord the agent should ensure that the tenant receives a sufficiently detailed inventory/check-in at the beginning of the tenancy which records the condition of the property and/or contents. The tenant should be given the opportunity to amend and add any items with a final version being agreed. Tenants are advised to keep a copy of the amended document and use registered post when returning the original to the agent.
Does the landlord/letting agent have to provide an inventory/check-in?
No, however it is strongly recommended as the report will be vital in resolving any future deposit disputes.
When dealing with an agent you should ensure that you understand the fees being charged for the services that the agent is providing. Fees might be collected as a single amount at the start of the tenancy or as a monthly deduction from rent received or a combination of the two. Generally, costs associated with the setup of the tenancy agreement (such as referencing) are charged to the prospective tenant.
The agent must comply with various requirements about how To Let boards are displayed, how viewings are conducted, and whether marketing should continue after an offer is received. Agents are legally bound under the Consumer Protection from Unfair Trading Regulations 2008 to describe a property truthfully and provide material information to allow potential tenants to make an informed transactional decision. Lettings particulars should give a general description of the property and will highlight, for instance, the type of heating, double glazing installed, or appliances or furnishings that may be included in the tenancy. The agent will not have tested any facilities but if they are of particular importance to you it is wise to question the agent further and he can ascertain the relevant information from the landlord on your behalf.
Maintenance and Repairs
The tenancy agreement sets out the landlord and tenants maintenance and repair responsibilities the agent is not a party to that agreement. The tenancy agreement is between the tenant and landlord. If the agent is managing the property his role is to receive notifications from the tenant and pass these to the landlord. It is then up to the landlord to take the necessary action which may involve instructing the agent or other third parties to deal with the problem.
Landlords have a responsibility to understand and comply with their legal obligations relating to gas safety, electrical installations, the landlord is responsible for ensuring that the property is safe to let.
If the tenant requires action to be taken in regard to facilities at the property before they move in, these specific conditions should be written down and agreed by the landlord at the same time as their offer.
Negligence is a term with a legal meaning and only a court can decide if an agent’s actions or inactions were negligent. The Ombudsman cannot decide claims of negligence and cannot speculate on what a court may decide. Consumers should seek legal advice if they wish to pursue a negligence claim.
Takes the assumed or actual costs associated with purchasing the property into account to produce a figure in respect of the relationship between the rental income and the total capital investment.
When an offer has been accepted the agent must inform the applicant whether or not marketing is to continue.
The rental figure given by the agent to the landlord should represent current market conditions. The agent must be able to support any figure given, and, wherever possible, it must be based on comparisons with similar properties in a similar location. The landlord is free to set the rent at whatever level he sees fit, regardless the agents recommendations.
A term entitling the tenant to operate the premises without interference from the landlord.
If instructed the agent will obtain references for potential tenants. Generally, although not always, the agent will use a referencing provider to carry out this work and it is the provider that produces a report which details tenant suitability for the proposed let. The report and other factors will be considered when making a decision as to whether to rent the property to the potential tenants.
When dealing with the agent landlords should understand precisely what references have been obtained and whether any conditions were attached to the report. The agent may be restricted on the detail he can provide because of Data Protection legislation but he should reveal any adverse comments from the referencing process to enable landlords to make an informed decision on whether or not to proceed.
Under the tenancy agreement the tenant agrees to pay the landlord a set level of rent, often on a specific date each month. Where an agent has been instructed to collect rent, they should have procedures in place to notify both landlord and tenant (and guarantor if relevant) in a timely manner, of rent that has become appreciably overdue and take suitable steps to notify rental warranty insurers (if appropriate) as necessary. However, regardless of whether the agent has been instructed to manage the tenancy, the responsibility to pay the rent rests with the tenant. The agent will not be party to the tenancy agreement, therefore, any claim for rent arrears should be directed to the tenant citing their obligations as set out in the tenancy agreement.
The Referencing Provider
Employed by the agent or landlord to carry the checks on prospective tenants. Provides a report regarding the suitability or otherwise of the prospective tenant based on the checks carried out.
The TPO Code of Practice for Letting Agents, requires agents to carry out referencing enquiries suitable to the circumstances of the applicant or as instructed by the landlord. This could also include direct application to third party referees, checking the Electoral Roll, viewing previous utility bills, driving licence or passport or any combination of these. If the applicant undertakes his own references, the agent should take reasonable steps to validate their authenticity.
Right to Rent Checks
From 1 February 2016, all landlords in England are required to conduct ‘right to rent checks’ as part of the referencing process for potential tenants. Agents can provide this service and landlords should check that the service is included when instructing a letting agent to market their property for let. Further guidance from the Home Office can be found here https://www.gov.uk/check-tenant-right-to-rent-documents
Role of the Letting Agent
The letting agent works for the landlord of a property to find a suitable tenant. He will draft property particulars, market the property, conduct viewings and deal with the formalities of referencing and drafting the tenancy agreement. Whilst the agent has to treat the tenant fairly he is required to act in the landlord’s best interests. He may also manage the property for the landlord.
Terms of Business
The agent must provide written Terms of Business that confirm the services agreed with the landlord and clearly state and explain all fees and charges. Termination terms and the landlord's cancelation rights must also be included.
Tenants should expect to be supplied with a draft tenancy agreement before signing, which records the rent, deposit or ancillary fees and charges, duration and repair obligations.
The tenancy agreement is a contract between the landlord and tenant and any breach of that agreement, such as non-payment of rent, is a matter between the landlord and the tenant. The agent should explain the limitation he has with regard to ensuring the tenant and landlord meet their respective obligations.
Tenancy Deposit Schemes
By law any deposit taken in relation to an Assured Shorthold Tenancy, must be protected via a government approved deposit protection scheme. The Tenancy Agreement should contain the relevant information about the deposit and its protection; the agent should also advise what arrangements have been made to protect the deposit. It may be that the landlord arranges protection, depending on the services the landlord has instructed the agent to provide.
Below are the various schemes available in the UK:
England and Wales
This only applies to deposits taken under assured shorthold tenancies.
Can TPO look at complaints about the deposit monies?
No - that is the role of the tenancy deposit protection schemes. Timescales apply and you should not delay in making contact with the relevant tenancy deposit protection scheme.
For complaints that appear to relate to the handling of tenancy deposits, the Ombudsman may consider whether the agent has acted in accordance with their obligations under the TPO Code of Practice and their contract with the landlord. However, deposit deductions are a matter between the landlord and the tenant under the terms of the tenancy agreement. The Ombudsman does not adjudicate on the appropriate distribution of the deposit monies, that is the role of the tenancy deposit protection schemes.
Tenant 'Fees and Offer Conditions'
Prior to a prospective tenant’s offer being formally accepted, agents must set out in written form and actively flag any significant tenancy pre-conditions and terms for the letting, including the circumstances in which the prospective tenant may have any potential financial liability for fees, charges or penalties relevant to:
- the processing of the tenant’s application to rent the property, including the cost of any credit checks to be made by the agent or the landlord;
- the tenant’s this withdrawal, at any stage, of their application for the tenancy or the landlord’s rejection of it. Consumers are entitled to a refund of a fair proportion of any prepayments made under a contract that does not go ahead or that ends before they have enjoyed any significant benefit;
- the initial setting up of the tenancy including inventory/check-in costs;
- any ongoing or future liability for fees or charges payable to the agent by the tenant.
If the prospective tenant wishes to apply conditions to his offer to rent the property (such as requesting additional furniture, appliances or professional cleaning), these should be provided at the same time as submitting the offer, preferably in writing. Prior to signing any agreement in relation to the tenancy, the prospective tenant should ensure any conditions are recorded.
Can the agent sign the tenancy agreement on behalf of the landlord?
This depends upon the terms and conditions of the landlord's agreement with the agent. It is not unusual for a landlord to give permission for the agent to sign a tenancy agreement on their behalf. The tenancy agreement is still a contract between tenant and landlord, even if signed by the agent on the landlord’s behalf.
Should the agent provide me with the landlord's contact details?
Under the Landlord and Tenant Act 1985, if the property is in England or Wales the agent is required to provide an address for the tenant to serve notice should they need to at the commencement of the tenancy or within 21 days of a written request. It cannot be a PO Box number. The agent does not have to provide telephone numbers. Details of the landlord are normally contained within the tenancy agreement.
The agent must follow the landlord’s instructions on how viewings should be conducted. He will record and pass on to the landlord any feedback from viewings. The agent must provide any resident tenant with the appropriate notice of access, as set out in the tenancy agreement.