For agents, compliance is essential to maintain a reputable business and safeguard the interests of both landlords and tenants. But with so many boxes to tick and things to be mindful of, the question of how to achieve compliance is often asked by agents of all stripes.
To put it simply, there is no single way for an agent to achieve complete compliance, instead, there are a few things that agents must be mindful of at all times which will set the correct foundations moving forward.
These predominantly revolve around four key areas – staying informed with regulations and legislation, understanding the market, accurately managing externals, and communicating effectively with your landlords and tenants. Getting off to a good start in these areas will go a long way towards the quest for compliance.
Let’s take a closer look at each of those areas and frame them with some real-world examples.
Staying informed with regulations and legislation
Knowing is half the battle, so estate agents should always look to have a firm understanding of evolving legislation and regulations for several crucial reasons. First and foremost, it is vital for legal compliance.
Real estate is a highly regulated industry with laws that change over time. Ensuring that you stay in the loop at all times is essential to prevent legal complications down the line, which could lead to financial penalties and potential damage to the reputation of the business.
This could be staying abreast of things like the Domestic Minimum Energy Efficiency Standard (MEES) Regulations, guidance around Electrical Installation Condition Reports (EICR), amendments to the Smoke and Carbon Monoxide Alarm Regulations…the list goes on.
Any competent estate agent will know these like the back of their hand, or will at least know the best place to refer to the ins and outs of these laws, but that doesn’t account for changes to legislation. As is the case with many rules and requirements, they can and often do change over time, so it’s important to stay on top of those evolving changes.
This can be best achieved by following relevant social media channels and websites, such as online publications like Property Industry Eye, or national organisations and representative bodies like Propertymark. Even the early rumblings of a change can alert an agent to further reading, giving them a future-focused perspective on their operations.
Above all, a commitment to staying informed enhances an agent's professional standing, so clients are all the more likely to trust and recommend agents who exhibit knowledge and a commitment to legal compliance and ethical conduct.
Failing to keep up with the evolving regulatory landscape can have significant consequences. Ignorance of the law because it has changed isn’t a “get-out-of-jail card”, and lawsuits or regulatory fines can be costly and damaging.
One example of this currently underway is the proposed Renters Reform Bill. At the time of writing, it is currently at its second reading in the House of Commons. However, when it does inevitably reach Royal Assent, there will be a number of shake-ups to the private rented sector that agents will absolutely need to be mindful of.
We consistently cover the Renters Reform Bill on our blog, so follow Inventory Base for the latest updates on that and more.
Keep an eye on the UK market
The UK property market can be volatile at times, so it is a challenge to navigate for both landlords and tenants. Recently, we’ve seen tenants face mounting pressure due to a decreasing supply of rental properties, especially in cities like London, where available properties have dwindled. Similarly, rent costs have surged across the UK and this rental squeeze is causing a strain.
The situation of landlords is not without its challenges either. Rising interest rates have led to increased mortgage costs, making it difficult for many landlords to manage higher bills. Inevitably, these costs have to be passed on, but this in turn raises the risk of tenant arrears.
Private landlords are absolutely crucial for the supply of rental homes in the UK, particularly as the number of council homes has decreased in the last decade. Many landlords may not have the financial means to absorb rent arrears or interest rate hikes, so they’re vulnerable to increasing costs just as much as tenants.
As such, some landlords are considering selling their properties due to financial pressures and rising arrears, while others are seeing an opportunity to expand their portfolio and increase housing supply for the millions of tenants in the UK.
While these market movements may be evident to those operating in the industry on a day-to-day basis, it’s still important to consider the bigger picture as an agent. This involves understanding the perspectives of both landlords and tenants so you can confidently navigate the challenges that lay ahead, acting as an advisor in times when the picture may not be quite as clear for them as it is for you.
Manage contractors and avoid the pitfalls
Effective contractor management is a critical aspect of an agent's responsibilities. This involves ensuring that contractors and other externals are efficiently managed and potential pitfalls are avoided.
It all starts with contractor selection. Agents should rigorously evaluate and screen potential externals – whether they’re inventory professionals, conveyancers, maintenance teams, and so on – assessing their credentials, licenses, insurance, and track record.
After that, clear contracts are vital. While we’re not experts in law, the more comprehensive and legally sound contracts are the better, detailing the scope of work, timelines, payment terms, and so on. Clarity is essential to establish precise expectations and avoid misunderstandings.
Open and ongoing communication with contractors is key, too. Agents should maintain regular contact, ensuring that they communicate all important property-specific details and any changes in requirements as they evolve. Encouraging prompt reporting of any issues can improve transparency as well, so problems can be resolved much quicker.
From there on out, it’s all about setting expectations, effective supervision and monitoring of contractor work and documentation. Why documentation? Well, comprehensive records of all contracts, invoices, communication, and reports are essential, in case any disputes arise in the future.
Maintain effective communication with landlords and tenants
Maintaining effective communication between agents, landlords, and tenants is one of the most important parts of compliance. For example, if a landlord has indicated a rent increase, but this wasn’t effectively communicated within the legal timeframe, then the landlord may miss a tenancy period without the extra income.
The best ways to avoid these kinds of scenarios revolve around transparency, timeliness and clear channels of communication. Establishing a foundation of transparency and promptly sharing important information with both landlords and tenants is crucial, whether that’s for property-related matters, lease agreements, or maintenance schedules.
And this, of course, can only be possible with clear and accessible communication channels. Many might favour email chains, but it’s not uncommon now for WhatsApp groups to be created for agents and tenants, or landlords and agents, so long as they are GDPR compliant and can be documented off-device. Additionally, following up phone calls with action points by electronic record (email, WhatsApp, etc) is important for clarifying any issues as well as documenting all requests.
But communication goes both ways, it’s not just about communicating to tenants or landlords. So often, an agent acts as a mediator between the two parties, so it’s important to actively listen to the concerns of your clients and be attentive to any questions or feedback.
Conflicts are bound to arise in this field, so agents must be prepared to handle disputes or issues promptly and impartially. Mediating between landlords and tenants, so you can reach fair resolutions, is fundamental for maintaining lasting professional relationships.
It’s also worth mentioning that recognising the individual needs of each landlord and tenant is important, too. The best agents tailor their communication style to each individual, with some preferring more frequent updates over others who may prefer infrequent contact.
Whatever the case might be, agents should still be proactive with the education of landlords and tenants. For example, if a tenant were to raise a query about condensation or dampness, handing over information or resources for tips to mitigate these issues can go a long way in resolving the problem before it even reaches the landlord.
Helping you stay compliant
Ensuring complete compliance in the realm of lettings and property management is multifaceted. Staying informed with ever-evolving regulations and legislation is foundational, as it forms the bedrock of legal compliance and protects the reputation of the business. Keeping a watchful eye on the UK property market is essential, too, and effective communication with externals and clients is paramount.
To learn more about this and much more, why not register for the upcoming ICG event on 27th October – Growing a successful Lettings Agency – tackling new compliance challenges. Inventory Base will be in attendance to discuss some of the main compliance issues faced by lettings agents today. Register now to reserve your spot!