In some local markets in the UK it is not uncommon for agents from different companies to work together to arrange private rental property deals. Essentially one agent will have the property and therefore the relationship with the landlord and the other agent will have been approached by a tenant who will suit that property. It is then usually the case that agents work together with one agent acting as the sub agent of the other to secure a rental deal between the landlord and tenant. The agents will split the commission between them while the landlord and tenant will be largely uninterested in the relationship between the two agents.
Historically these arrangements between agents were based on oral contracts and gentleman’s agreements although they are now more commonly reduced to writing.
We have taken a number of calls on our helpline from agents which illustrates the importance of ensuring that these agreements are in writing and clear as to the details. In one such case an agent had agreed a split commission with an sub agent for the initial rental period of 6 months. The agreement between the agents also stated that commission would continue to be split in the event that the tenant renews. Unfortunately, this agreement was not in writing and the agent receiving the commission did not pay the sub agent for any renewals despite the agreement made at the outset.
If the agreement had been made in writing it is unlikely that any agent would avoid paying commission for fear of legal action. Where it is not a deterrent a sub agent may find obtaining a judgement for non-payment of commission much easier if there is a written agreement. It is therefore imperative to ensure that where agents agree split commissions they do so in writing. A sub agency agreement should then include details such as the commission to be payable and the times and dates and whether or not payment is due on renewal. Some agents may also include further terms which prevent agents approaching each other’s clients and attempting to circumvent the split commission relationship.
An updated sub agency agreement will be available on our website shortly. In the meantime, for members of the helpline seeking advice on these arrangements please do not hesitate to contact us. If you are not a member of the helpline contact can be made but fees may be payable.