Holiday home concept. Photograph of a pink building with blue shutters on the window and pink flowers on the window sill

Agents need a set of terms that dictate the agreement between them and the owners of the properties that they act as agent for.

Here are five key things that agencies should consider for their terms.

#1 – Agency services

Firstly, it is important to consider the different service levels being offered. Some agencies only offer marketing services for properties, others also offer property management including being the guest’s point of contact during their stay. Often agencies will have different tiers of service. It is important to be clear what is included within each service level and what is outside of the agent’s offering, along with the associated costs.

#2 – Obligations

There will be a number of different obligations on the agent and the owner. The agent’s obligations will be largely dictated by the services they agree to offer as explored above.

For the owner, their obligations may include things like:

  • maintaining the property to a certain standard;
  • complying with the agent’s rules around personal use of the property; and,
  • meeting health and safety requirements confirmed by the agent.

There is wide scope here, and the obligations on each party will be dependent on the specific relationship.

#3 – Payment process

Most agents will take a proportion of the booking price as commission – either as a set amount or a percentage, before paying the remainder to the owner.

There may also be agency fees and other charges in respect of costs incurred by the agent on the owner’s behalf that are deducted before the owner receives payment.

#4 – Cancellations

Agency terms will need to cover what happens in the event of cancellation of bookings. There are three types of cancellations that need to be covered:

  1. cancellation by the guests;
  2. cancellation by the owner; and
  3. cancellation by the agent.

It is important to set out what happens in terms of payments, alternative bookings, and any other penalties in these three circumstances.

#5 – Withdrawal or sale of the property

Where an owner wishes to sell their property or withdraw their property from the agency, the agent’s terms need to provide for what happens to the bookings already in place. This may involve having a notice period and changing the way future bookings are made e.g., on a rolling basis.

Where the property is being sold to a new owner who wishes to continue marketing the property through the agent, there may be a mechanism for dealing with existing bookings and essentially ‘transferring’ the relationship.

When drafting agency terms, it’s important to ensure that all the legal requirements are meet. Should you need advice on your agency terms, or are looking to implement new terms, please get in touch with our Intellectual Property, Data Protection and Technology team by phone on 0345 450 5558 or by email at enquiries@stephens-scown.co.uk