• Home
  • About
  • Clinic
  • Training
  • Tenants
  • Landlord Law

The Landlord Law Blog

From landlord and tenant lawyer Tessa Shepperson

  • Home
  • Posts
  • News & comment
  • Cases
  • Tenants
    • The Renters Guide Website
    • 15 Places for tenant help
  • Clinic
  • Series
    • Analysis
    • should law and justice be free
    • HMO Basics
    • Tenancy Agreements 33 days
    • Airbnb
    • Grounds for Eviction
    • Tips

Letting agents – instead of renewal fees

July 19, 2009 by Tessa J Shepperson

I was a bit shocked, although I suppose not entirely surprised, to read in the excellent 4wallsandaceiling property tribes forum about what some greedy letting agents are doing to replace the renewal commission they are going to lose as a result of the decision in the OFT v. Foxtons case.

They are contacting tenants and persuading them to leave at the end of the fixed term, so they can earn commission on finding a new tenant for the landlord.

In fact they will be gaining twice from this manouvre, as they will presumably get commission from the landlord of the property the tenants are moving too also, having done little work for it.

The agents on the 4walls forum (who don’t do this) ask whether this practice is legal. The answer is no. This is probably a good time to take a look at the law of agency, which most people have either forgotten or think does not exist.

Trotting over to the bookcase to get out my book on agency law, I find this rather good quotation from a Judge in an agency case:

“The position of principal and agent give rise to particular and onerous duties on the part of the agent, and the high standard of conduct required from him springs from the fiduciary relationship between his employer and himself. His position is confidential. It readily lends itself to abuse. A strict and salutary rule is required to meet the special situation.”

The fiducuary duty is an important one.

Under agency law there are a number of principles and rules, which are in essence as follows:

  • The agent must perform his contractual duties, and follow his principals (ie the landlord’s) instructions
  • He must do this with ‘due care and skill’ appropriate to the type of work he is doing
  • He must not delegate his duty (without the principal’s consent)
  • He must not put himself in a position where his duties to the principal conflict with his own interests
  • He must not take bribes
  • He must not take advantage of his position or his principal’s property in order to obtain a benefit for himself, and
  • He has a duty to account (ie he must keep his principal’s money separate from his own, and hand it over, together with all relevant documents and accounts when asked)

I am sure many landlords will smile ruefully on reading this, their experience having been quite different. From what I hear about many agents (not all of them), they seem to have no idea that they are acting in a fiduciary capacity and appear to be acting in their own interests only.

So what can a landlord do if he finds that his agent has acted against his interests, and persuaded his tenant to leave so he (the agent) can earn a new commission finding a replacement?

Well I would that thought that, as this is a clear breach of the agent’s fiduciary duty, the landlord can go to court and claim both a refund the commission received by the agent for re-letting the his property, and the commission received by the agent respect of the property to which the tenant moved, along with a refund of all expenses incurred by him as a result of the tenant vacating.

It might be an idea, if a clear example of this practice is found, for a test case to be brought (possibly funded by one of the landlords’ associations??), so these agents are made aware of their responsibilities.

Print Friendly, PDF & Email

Filed Under: News and comment Tagged With: letting agents, OFT v. Foxtons

Scroll down for the comments

IMPORTANT: Please check the date of the post above - remember, if it is an old post, the law may have changed since it was written.

You should always get independent legal advice before taking any action.

Notes on comments:

For personal landlord and tenant related problems, please use our >> Blog Clinic.
Note that we do not publish all comments, please >> click here to read our terms of use and comments policy. Comments close after three months.

Keep up with the news on Landlord Law blog!

To get posts sent direct to your email in box click here

About Tessa J Shepperson

Tessa is a specialist landlord & tenant lawyer and the creator of this site! She is a director of Landlord Law Services which runs Landlord Law and Easy Law Training.

« Fool’s Gold by Gillian Tett
Another TDPS case – Locke & Orchard v Osborn »

Comments

  1. David Lawrenson says

    July 19, 2009 at 1:17 PM

    Very interesting Tessa.
    I remember seeing on a TV hidden camera documentary a few years ago, a certain large firm of letting agents telling the tenant that the landlord would only do a 12 month term (this was so the agent could earn more commission)whereas the landlord in reality only wanted a 6 month term tenancy.
    Let's not forget though, most letting agents are not crooks, even in London. And some landlords can be very hard work and overdemanding as I said in a recent blog.
    However, that does not justify some London agent's rapaciousness.
    Foxtons have really got their just desserts but the key message to landlords must be READ THE CONTRACT. And that message still applies even after this case.
    Regards
    David Lawrenson
    http://www.LettingFocus.com

  2. Tessa Shepperson says

    July 19, 2009 at 8:52 PM

    Yes, I agree, there are many excellent agents. Indeed the person who raised the point on the 4walls forum is an agent.

    Really the sooner they can bring in regulation for letting agents the better, as the greedy and unprincipled agents are putting the rest of the profession in a bad light, which affects all of them, including the good ones, which is unfair.

    There is also the problem that it is difficult for ordinary landlords to tell easily which are the greedy agents, although as you say, reading the contracts would be a start!

“Interesting posts on residential landlord & tenant law and practice - in England & Wales UK”

Subscribe to the Landlord Law Blog by email

Never miss another post!

Sign up to our
>> daily updates

If you are new to the blog >> click here

Get Your Free Ebook:

Click to get your Free Ebook

>> Click Here for Your Free Copy

Featured Post

Tessa Shepperson

Why you need and how to get proper legal advice on landlord and tenant issues

Tessa’s Podcast

The Landlord and Lawyer Podcast

Worried about Insurance?

Landlord Law Insurance Mini-Course

Disclaimer

The purpose of this blog is to provide information, comment and discussion.

Although Tessa, or guest bloggers, may from time to time, give helpful comments to readers' questions, these can only be based on the information given by the reader in his or her comment, which may not contain all material facts.

Any comments or suggestions provided by Tessa or any guest bloggers should not, therefore be relied upon as a substitute for legal advice from a qualified lawyer regarding any actual legal issue or dispute.

Nothing on this website should be construed as legal advice or perceived as creating a lawyer-client relationship (apart from the Fast Track block clinic service - so far as the questioners only are concerned).

Please also note that any opinion expressed by a guest blogger is his or hers alone, and does not necessarily reflect the views of Tessa Shepperson, or the other writers on this blog.

Cookies

You can find out more about our use of 'cookies' on this website here.

Associated sites

Landlord Law Services
The Renters Guide
Eco Landlords
Your Law Store

Legal

Landlord Law Blog is © 2006 – 2021 Tessa Shepperson.

Note that Tessa is an introducer for Alan Boswell Insurance Brokers and will get a commission from sales made via links on this website.

© 2006–2022 Tessa Shepperson | Rainmaker Platform | Contact Page | Privacy | Log in

This website or its third-party tools use cookies which are necessary to its functioning and required to improve your experience. By clicking the consent button, you agree to allow the site to use, collect and/or store cookies.
I accept