Clive Betts MP recently launched a scathing attack on "cowboy" letting agents, accusing them of ripping off both landlords and agents. His proposals for a crackdown on the industry as a whole will only be applicable to England and Wales but the Scottish Government has made it clear that letting agent regulation is high on their agenda. Many agents in Scotland act within the law and provide an excellent service to landlords. However as with the "rogue" landlords, there are rogue letting agents who give the industry a bad name.
From a tenant's perspective a recent review resulted in clarification that certain agent fees charged to tenants are illegal. However there appears to be an increase in the number of landlords looking to claim against agents who have acted improperly. In particular, landlords may find themselves faced with the following scenarios, where an agent:-
- takes a tenant's deposit but fails to deposit it into a tenancy deposit scheme within the time allowed
- fails to serve the correct notices to terminate the tenancy
- disappears with rent and/or deposit.
A landlord may be able to claim for losses where an agent fails to fulfil their duties under the terms of the management agreement or where the agent has been professionally negligent; where the standard of care exercised by the agent fell below that of a reasonable agent and it is shown that no agent of ordinary skill would have behaved in the same manner as the agent in question.
However, landlords should beware that where a tenant suffers a loss their claim is generally against the landlord. For example, if a deposit was not paid into a tenancy deposit scheme, the tenant would be entitled to raise court action against the landlord and the landlord could find himself have to pay a fine of up to three times the amount of the deposit. The landlord would then be able to sue the agent if they failed in their duties but this may be difficult, particularly in situations where the agent may have disappeared.
Landlords should make sure any management agreement clearly states the agent's duties and liabilities, so a landlord is protected in the event of any failure on the agent's part. If you are a landlord who is looking to appoint an agent, Landlord Accreditation Scotland can give you a list of agents who are accredited.
For more information or advice on the private rented sector, get in touch with our team.