Being a landlord can be a challenging job. It’s not just about owning a property, but also about managing tenants, maintenance, and legal matters. Often, landlords rely on letting agents to handle the day-to-day responsibilities of renting out their properties. But what happens when the relationship between a landlord and their letting agent goes wrong, and there’s no formal contract or written terms and conditions in place? Can the landlord simply cancel the agent’s services? And if so, what rights do they have?
In this article, we’ll explore what rights landlords have when dealing with letting agents who operate without written terms and conditions, and what steps can be taken to terminate the agreement.
What’s the Importance of Written Terms and Conditions?
Before diving into the details of what landlords can do in the absence of a contract, it’s essential to understand why written terms and conditions are so important. A written contract between a landlord and a letting agent outlines the rights and obligations of both parties. It covers aspects such as:
- The agent’s responsibilities (collecting rent, dealing with repairs, etc.)
- Fees and commissions the agent will charge
- Notice periods for terminating the agreement
- Procedures in case of disputes
Without a written agreement, both the landlord and the agent may be left in a grey area, leading to misunderstandings and legal complications. In short, written terms act as a safety net that provides clarity and protection.
Is a Contract Always Necessary?
While written terms are highly recommended, they are not always required. Many landlords and agents enter into verbal agreements based on trust or informal arrangements. However, the absence of a formal contract doesn’t mean the agent can act without any accountability. UK law provides some protections to landlords, even in the absence of a written agreement.
The Consumer Rights Act 2015
One of the key protections for landlords comes from the Consumer Rights Act 2015. Under this legislation, letting agents are required to provide their services with “reasonable care and skill.” This means that even without a formal contract, agents must still meet certain standards of conduct. If they fail to do so, landlords may have the right to terminate their services.
Section 49 of the Consumer Rights Act 2015 states that all service providers must perform their services with reasonable care and skill. This means that if a letting agent is negligent, fails to meet their responsibilities, or provides subpar service, they can be in breach of this law. Common examples of agents failing to meet this standard include:
- Not paying rent collected from tenants to the landlord
- Failing to protect tenant deposits in an authorised scheme
- Failing to carry out repairs or deal with maintenance issues
- Not keeping landlords informed about serious problems with the property or tenants
If a landlord believes that the agent has breached their duty of care, they may be able to terminate the agreement.
Rights of Landlords in the Absence of a Contract
So, what rights do landlords have when there’s no written contract? Here’s a breakdown of key factors landlords should consider:
1. Right to Terminate for Poor Service
Even if there is no written contract, landlords still have the right to terminate the services of a letting agent if the agent has failed to provide their services with reasonable care and skill. As mentioned earlier, the Consumer Rights Act 2015 provides protection for landlords in this regard. If an agent has behaved poorly, such as withholding rent or not fulfilling their duties, the landlord can argue that they are no longer obligated to continue using their services.
2. No Binding Notice Period
One of the most significant challenges of not having a written contract is that there is no specified notice period for terminating the agreement. This can work in the landlord’s favour because they are not bound by any terms that might have required them to give, for example, 30 or 60 days’ notice. In such cases, the landlord can often cancel the agent’s services immediately, especially if the agent’s behaviour has been unacceptable.
3. Right to Refuse Further Payments
If a landlord decides to terminate their relationship with the agent, the next question is whether they are still required to pay any fees or commissions for the remaining period of the rental contract. In the absence of written terms and conditions, there’s no clear obligation for the landlord to continue paying the agent. If the agent has failed to provide adequate service or has breached their duty of care, the landlord can argue that they are no longer obligated to pay further fees.
It’s essential, however, to be cautious. If the agent insists on payment, it may be worth seeking legal advice to ensure that there’s no risk of the agent pursuing the matter in court.
Taking Legal Action: When Is It Necessary?
In some cases, even when there’s no contract, disputes between landlords and agents can escalate. The agent may try to demand fees or challenge the termination of their services. If this happens, landlords can take the following steps:
1. Gather Evidence
If a landlord is planning to terminate the agent’s services due to poor performance or a breach of duty, it’s essential to gather evidence of the agent’s failings. This could include:
- Emails or messages where the agent failed to respond to queries or requests
- Records of rent payments not being forwarded on time
- Evidence of neglected repairs or maintenance issues
- Documentation showing failure to protect tenant deposits
This evidence will be crucial if the matter escalates to legal action or a dispute resolution process.
2. Refuse Payment and Respond in Writing
If the agent demands further payment, landlords should respond in writing, explaining why they believe they are entitled to terminate the agreement. They should refer to Section 49 of the Consumer Rights Act 2015, highlighting the agent’s failure to provide services with reasonable care and skill. It’s also worth mentioning that without a formal contract, there are no binding terms obligating the landlord to continue the agreement.
Landlords can also reserve the right to counterclaim for damages if the agent’s failings have caused financial loss (for example, lost rental income due to mismanagement).
3. Seek Legal Advice
Before taking any drastic steps, such as withholding payment or counterclaiming for damages, it’s wise for landlords to seek legal advice. A solicitor with experience in landlord-tenant law will be able to assess the situation and determine whether the agent’s failings are sufficient to justify terminating the agreement.
4. Consider Mediation
In some cases, mediation can be a more cost-effective and less stressful way to resolve disputes than going to court. Mediation allows both parties to come to an agreement with the help of a neutral third party. If the agent has acted unprofessionally but is still demanding fees, mediation could help resolve the issue without the need for costly legal proceedings.
How to Prevent Issues in the Future
If a landlord has experienced problems with an agent who operated without written terms and conditions, they may want to take steps to prevent similar issues in the future. Here are a few key tips:
- Always ask for a written contract: Before entering into any agreement with a letting agent, it’s crucial to have a clear, written contract that outlines both parties’ rights and obligations. This will provide protection and clarity if things go wrong.
- Understand your rights: Even with a written contract, it’s essential to understand the legal rights provided by the Consumer Rights Act 2015. If an agent fails to provide reasonable care and skill, you may still have grounds to terminate their services.
- Vet your agents carefully: Always do your research before hiring a letting agent. Check their credentials, read reviews, and ask for references to ensure you’re hiring a reputable professional.
Conclusion
While having written terms and conditions with a letting agent is always advisable, landlords still have rights when no formal contract exists. Thanks to protections provided by the Consumer Rights Act 2015, landlords can terminate an agent’s services if they have failed to provide reasonable care and skill. If you’re a landlord in this situation, it’s essential to gather evidence, seek legal advice if necessary, and take steps to ensure you don’t face similar issues in the future. By knowing your rights and being proactive, you can protect your interests and manage your property with confidence.