A Lettings Agency Terms of Business establishes the management terms of a property between a letting agent and a landlord. It sets out each parties' responsibilities and obligations depending on the service, their liabilities under the contract and the associated fees.
Also known as an agency agreement, a Letting Agency Terms of Business agreement gives a letting agent the power to act on behalf of the landlord, sometimes without their prior consent, to ensure that the property is adequately managed. Service charges will apply to the landlord in exchange for the management of the property.
A letting agent will source tenants for the landlord and manage certain aspects of the tenancy depending on whether the landlord has engaged the agent on a let-only or full management basis. When sourcing tenants, a letting agent will conduct viewings, ensure the prospective tenants have the right to rent in England and Wales, and conduct referencing. When an agent is managing the property on the landlord's behalf, they will create the assured shorthold tenancy agreement (also known as an AST), ensure the gas safety and energy performance certificates (EPC) and other prescribed information are provided to the tenant at the start of the tenancy and that the gas appliances and electrical equipment are safe.
A full management letting agent will also take care of holding deposits, registering deposits with tenancy deposit protection schemes, schedules of condition, rent collection and chasing rent arrears if and when they occur. At the end of the tenancy, letting agents will take care of the inventory checkout and sourcing new tenants in exchange for a renewal fee. For the duration of the tenancy, managing agents are usually paid a management fee which is a percentage of the rental income and can manage legal proceedings on the landlord's behalf.
A letting agent must also be registered with a Redress Scheme such as the Property Ombudsman. A letting agent is not usually responsible for managing the landlord's tax implications but for additional charges can take care of some of the communication with HMRC for non-resident landlords based overseas. Letting agents can also manage the landlord's relationship with their local authority for HMO and planning permission applications.
Property management also involves inspections at the property address to ensure the occupiers are following the terms of the tenancy agreement. If ever there are breaches, the letting agent can act as an intermediary between the landlord and tenant if ever the resolution can't be solved immediately, for example if the tenant has bought a non-permitted pet mid-tenancy.
A Letting Agency Terms of Business agreement should make the parties to the agreement clear and the address of the property that is to be managed. It should also outline the coverage of the agreement (let only or fully managed) and the fee. Under a Letting Agency Terms of Business, the parties should agree on maximum expenditure limits and fees.
Whilst you might be able to download a Letting Agency Terms of Business agreement online, having examined such templates Legislate has found that they are either too specific to a letting agency or do not offer adequate coverage.
For example, some of these agreements fail to include an anti-money laundering clause that addresses an agent’s regulatory requirements. Others failed to outline who is responsible for paying the deposit and council tax and whether the parties entered into a sole letting agreement whereby the named agent is the only party able to manage the property during its term. Crucially, some agreements even failed to outline where liability would fall, for example if the tenants made a claim for leaking pipes.
Creating your Letting Agency Terms of Business agreement on Legislate means that all of your client documents can be stored securely in one place. You, and crucially your team for no extra fee, can manage all the additional documents you need to manage properties including tenancy agreements, rent increase letters, guarantor agreements, section 8 and 21 notices and how to rent letters.
Legislate's patented technology also allows you to easily access tenancy statistics to help you better manage your properties in real time.
Crucially, when engaging with a new landlord you want to set the right impression that you are organised, modernised and efficient in your processes. Using Legislate to send out your Letting Agent Terms of Business agreement will offer your future landlord a better user experience and will ensure that both parties (especially in emergencies) can access their contract at any time, on any device, to check the terms of the agreement. Read our brief guide for additional information to help you build your lettings business on Legislate.
Creating a letting agent terms of business agreement with Legislate is straightforward. Specify if it is a let only or full management service and provide the terms of the agreement by answering simple questions. Invite the landlord when you are happy with the terms.
Once the landlord has reviewed the preview and accepted the terms they can sign. Legislate also supports witnessing should you require this.
For more information on how to create your agreements with Legislate, watch our letting agent today interview, sign up and read our letting agent terms of business contract tutorial or book an introductory call with one of our team members.