Letting Agent / Property Management Agreement

Overview

A letting agent / property management agreement is the contract by which a landlord instructs an agent to let and/or manage a rental property, in return for a fee. It is separate from — and usually sits alongside — the assured shorthold tenancy agreement the agent negotiates with the tenant: this document governs the relationship between the LANDLORD and the AGENT, not between the landlord and the tenant. Regulatory framework since 2019: since 1 October 2019, all letting agents and property managers in England handling landlords' or tenants' money must belong to an approved client money protection (CMP) scheme (unless money is never held, which is uncommon for a full management service). Separately, agents must belong to a government-approved redress scheme (The Property Ombudsman or the Property Redress Scheme) so landlords and tenants have somewhere independent to complain. These are legal requirements, not optional add-ons, and a landlord should verify both before instructing an agent. Let-only vs full management: the agreement should state clearly which service is being provided. 'Let-only' (or 'tenant find') covers marketing, referencing, and setting up the tenancy, after which the landlord manages the property directly. 'Full management' additionally covers rent collection, day-to-day maintenance, deposit registration, and handling repairs, gas safety and EPC compliance, inspections, and end-of-tenancy processes. The scope drives both the fee and the agent's day-to-day authority. Fees and transparency: since the Tenant Fees Act 2019, agents cannot charge tenants most fees (referencing, admin, inventory fees etc. are banned as against the tenant) — permitted charges from tenants are now essentially limited to rent, a capped deposit, a capped holding deposit, and a few narrow exceptions (e.g. a reasonable charge for a lost key, or contractual damages for early termination). The agent's fee for the SERVICE TO THE LANDLORD, by contrast, is a matter of private contract and should be stated as a percentage of rent (for management) and/or a fixed fee (for let-only), inclusive or exclusive of VAT. Statutory and safety compliance: where the agreement covers full management, it should specify who is responsible for arranging the annual gas safety check (Gas Safety (Installation and Use) Regulations 1998), the Energy Performance Certificate, electrical safety inspections (Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020), smoke and carbon monoxide alarms, and serving the tenant with the prescribed 'How to Rent' guide — all of which affect whether a subsequent section 21 notice would be valid. Deposit handling: if the agent takes a deposit, it must be registered with a government-approved tenancy deposit scheme (TDS, DPS, or mydeposits) within 30 days of receipt, and the prescribed information served on the tenant. The agreement should state whether the agent or the landlord is the deposit holder for these purposes. Termination: the agreement should specify a minimum term (if any), notice period to terminate, and — importantly — what happens to ongoing tenancies and any commission on tenancies introduced by the agent if the landlord terminates management and continues to let to a tenant the agent found (a common source of dispute is a 'renewal commission' clause surviving termination). When to use: whenever a landlord instructs an estate or letting agent to find a tenant and/or manage a residential letting on their behalf. Common pitfalls: instructing an agent without checking CMP and redress scheme membership; leaving the scope of 'management' undefined; failing to specify who registers the deposit; and overlooking renewal-commission clauses that continue to apply after the management agreement ends. This template is a drafting aid only and should be reviewed by a solicitor before use.