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David Smith Solicitor, Anthony Gold
Duty of Care T
here have been a number of reports in the papers recently which suggest that agents owe a duty to tenants. These include a study
accusing agents of lack of transparency and being slow over repairs as well as statements from London mayoral candidates that they will create a new lettings agency run by the mayoral office to give tenants a better deal. These reports all labour under the misapprehension that agents are like other businesses with tenants as their customers. Nothing could be further from the truth. A lettings agent has two groups of people making use of its services – landlords and tenants. The interests of these groups are opposed and agent cannot work for both of them. Therefore, the agent must be more responsible to one group than the other. In fact, a lettings agent works solely and completely for its landlords. It is the landlord that the agent is in a contractual and agency-based relationship with, not the tenant. Moreover, an agent is a party who stands in the place of its principal, in this case the landlord, and represents his interests to the world. This legal principle has a number of facets but the most important for this discussion is that an agent owes much the same duty to a tenant as his landlord does; that is very little.
Remit It is always important to remember the key point that a lettings agent is nothing more than an extension of his client’s will. This brings the advantage that, provided the agent does not exceed his authority, he is able to remain behind his client in most cases and thereby ‘escape’ responsibility. Equally, this means that the agent must act in his clients interests even where that produces a harsh or unfair outcome for the other party, in this case the tenant. Therefore much of the criticism levelled at agents recently is unjustified and should, in fact, be levelled at their landlord clients. So what is an agent obliged to do? They are
34 l April 2012 l TheNegotiator
All agents have a duty of care to clients, but how far does this go? David Smith explains.
relationship with, not the tenant.”
“It is the landlord that the agent is in a contractual
not, contrary to popular belief, under a duty to repair the property if the landlord refuses to do so. They are obliged to obey some specific legislative obligations, though. However, it should be noted that the legislative obligations on an agent are generally duties owed to the state and therefore enforced by state bodies as criminal offences rather than by tenants in the civil courts.
These criminal offences include: l Failure to supply a gas safety certificate within 28 days of the initial letting or any renewal. Agents should remember that this is their responsibility where they are responsible to the landlord for arranging the letting or are managing the property;
l Not providing clear information to tenants about their charging structures. This often forms the basis of complaints to the Ombudsman but is also a criminal offence;
l Letting an unlicensed HMO or failing to manage it properly. Where an agent is collecting the rent then they bear a responsibility to ensure that the property is fully licensed and that the property is managed in accordance with the terms of the licence and the appropriate management regulations;
l Failing to obey a notice served under the Housing Health and Safety Rating System. An agent who is collecting the rent is liable for any failure to fulfil obligations set out on a notice requiring improvements to the property;
l Taking part in an unlawful eviction; an agent can be prosecuted where they are involved in unlawfully evicting a tenant.
These offences all involve fines but being
prosecuted can make a professional agent’s life very difficult as it will make it almost impossible for them to obtain HMO licences on behalf of their landlords.
Obligation So what obligations, if any, does an agent owe to a tenant? Actually, there are very few, because the agent is usually able to stand behind his principal. If an error is made, then the tenant’s first remedy is against the landlord and the landlord may then have a remedy against the agent. One case where an agent would have a clear breach of their duty to a tenant would be where the agent was aware of a defect in a property and failed to report it promptly to their client, or to act on an instruction to make repairs and the tenant suffered injury as a result. The other key responsibility owed by any lettings agent is to ensure that a tenancy deposit is protected. Where a property is being let on an AST, the tenancy deposit is required to be placed within an approved scheme and the prescribed information must be served. Where an agent is involved in the letting, even on a tenant-find only basis, the agent is directly liable for any failure to properly protect the deposit and give the necessary information to the tenant. Therefore, many of the criticisms levelled at
agents are based on misunderstandings. Agents should try to be relatively transparent with tenants, and make clear where possible that their loyalties lie completely with the landlord. They should also seek to educate landlords in their legal obligations and good practice. However, an agent should always remember that they must act to follow their clients’ instructions, however ill-advised or unpleasant they might be. If the agent finds those instructions offensive, then their recourse is to terminate the agency relationship.
David Smith is a solicitor at Anthony Gold email:
David.Smith@
anthonygold.co.uk l
www.the-negotiator.co.uk
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