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Increased risk for Letting Agents - are you protected?


Regulation in the private rented market is increasing rapidly.  New regulations, rules and requirements are being introduced at an alarming rate, all of which substantially increase the risk to letting agents of mistakes being made and landlords blaming letting agents for that mistake.

Examples of these recent changes include:

  1. The introduction of the new smoke and carbon monoxide regulations requiring a landlord to install a smoke alarm on each storey of rented premises, to install a carbon monoxide alarm in any room that is using a solid fuel burning combustion appliance and the obligation to make sure that both the smoke and carbon monoxide alarms are in full working order. Please click here
  2. The new Section 1 procedures which, amongst other things, mean a landlord cannot serve a Section 21 notice until a tenant has resided in the property for at least 4 months and meaning that a landlord cannot serve a Section 21 notice unless the landlord has provided the tenant with the energy performance certificate, gas safety certificate and a copy of the Government booklet “How to Rent – the checklist for renting in England”. Please click here
  3. The requirement for landlords to check the immigration status of any potential tenant and to take steps to remove any potential illegal immigrant from their property. 
  4. The upcoming changes for residential property that the property must be rated to have an energy performance rating of above “E”. Please click here


Risk for letting agents

All of these new rules and regulations substantially increase the risk and liability of letting agents who have not fully familiarised themselves with the new rules and procedures or taken adequate steps to protect against claims made by landlords who clearly are aware of the new regulations.  I have identified below five steps that all letting agents should take to protect their business against mistakes made or claims made by unscrupulous landlords:-

  • The first one is obvious.  All letting agents need to familiarise themselves with the new rules and regulations and address how your internal procedures need to be updated to cater for these changes.
  • Letting Agents need to revise their contractual obligations for both the advertised 'full property management' and 'let only' services provided.  You need to make it clear with whom responsibility for compliance with the new regulations rests and what additional charges you intend to make for any additional responsibility and services you agree to undertake.
  • Insist that your terms of business are sent to the landlord for each property instruction and signed and returned as evidence of acceptance of the terms of business. You should make it a condition of continuing to act that the terms of business are signed and returned by the landlord or in the absence of signing and returning the terms of business they have deemed to have been accepted by the landlord by their continued instruction of you.
  • Review and revise your standard terms of business to include clauses excluding or limiting liability for negligence. You are only able to do this if the exclusion or limitation of liability is clear, unambiguous and brought to the attention of the landlord.  At Lupton Fawcett we are experts in drafting specialist terms of business maximising your ability to exclude or limit liability for negligence.
  • Check the level and extent of your professional indemnity cover, making sure that, first of all, you have cover in place and, secondly that cover is provided in the event of losses claimed by a landlord as a result of a failure by the insured (letting agent) to provide a level of service, care and skill expected of a reasonably competent letting agent.

All these points are simple and straightforward.  It will not take you long to check that you have adequate cover in place in relation to all of these points and in the event that you are not ticking all of the above boxes you should then take time to obtain the correct and proper legal advice to avoid potential and costly negligence claims.

For further help or advice, please contact Rob Cooke who is a Director specialising in all areas of landlord and tenant law and property disputes.

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