Agency theory is used to understand the relationships between agents and principals. This leads to the principal-agent problem. The principal-agent problem occurs when the interests of a principal and agent come into conflict. Companies should seek to minimize these situations through solid corporate policy.

You can overcome the agency problem in your business by requiring full transparency, placing restrictions on the agent’s capabilities, and tying your compensation structure to the well-being of the principal.

Which one of the following actions is the best example of an agency problem? Paying management bonuses based on the number of store locations opened during the year.

Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents. Most commonly, that relationship is the one between shareholders, as principals, and company executives, as agents.

An agency cost is a type of internal company expense, which comes from the actions of an agent acting on behalf of a principal. Agency costs typically arise in the wake of core inefficiencies, dissatisfactions, and disruptions, such as conflicts of interest between shareholders and management.

For example, agency costs are incurred when the senior management team, when traveling, unnecessarily books the most expensive hotel or orders unnecessary hotel upgrades. The cost of such actions increases the operating cost of the company while providing no added benefit or value to shareholders.

A fee that an employee must pay if a company’s workforce is represented by a union and the employee chooses not to join that union. An agency fee is different from union dues, but is intended to cover the costs of collective bargaining, from which non-union employees benefit even if they do not join the union.

According to figures from unitedpropertyconnect.com, UK residential estate agents make an average salary of £41,392, that’s much higher than the UK average salary. With years of experience under their belts, successful and experienced agents can earn anything between £50,000- £100,000.

Although the legal fees to draft the agreement are typically paid by the landlord, the stamp duty is borne by the tenant. And here’s how to calculate the stamp duty fee: Legal fees for tenancy agreement period for three years and below. These refer to annual rent.

As a general rule, you can expect to pay a commission of between 7% and 10% of your weekly rent plus GST, but the agencies we spoke to for this article quoted commissions as low as 4% in some areas and as high as 15% in others. However, the services included in this commission vary between agencies.

They provide a buffer zone between Landlord and tenant which can help a Landlord avoid promising something they later regret. They can advise you on repairs and a maintenance schedule to ensure that your property holds its value.

Follow these seven steps to choose the right letting agent.

1. Decide on the services you need.
2. Research local letting agents.
3. Compare letting agent fees.
4. Check memberships.
5. Review money protection schemes.
6. Look at marketing strategies.
7. Ask about your future relationship.

A landlord’s legal liability v. The principal is. So if a property is in poor condition due to the agent failing to organise any of the repair work – the tenant does not sue the agent. If the landlord is sued by the tenant for things done by the agent, he can claim this money back from the agent.

Complain to trading standards Local council trading standards departments can investigate complaints about letting agents. You can report a letting agent to trading standards if the agent hasn’t registered with a letting agent redress scheme or their practices appear unfair.

To be specific, the landlord is liable for everything done by the agent – so long as this comes within the ambit of his ‘ostensible authority’. Here’s a nice blog over at the Landlord Law blog which explains it in more detail. Rent arrears & problem tenants – yup, same as above!

Most complaints related to letting agents can be reported to either the Property Ombudsman (TPO) or the Property Redress Scheme (PRS), which exist as an intermediary between agents and a tenant or landlord, and offer compensation in some cases.