Conflicts of interest among property agents are hitting small and medium-sized businesses, a study has found.
According to researchers at the University of Leeds, there is a lack of awareness among businesses – particularly SMEs – about the issues that can arise in commercial property lease deals that are handled by ‘duel agents’, which act for both the tenant and the landlord.
These duel agents face conflicts of interests, and many trade information between parties about a deal. This often means small business tenants get a raw deal, because they don’t have the resources to put in place their own checks.
Ignorance isn’t bliss
Commissioned by property company DeVono, the research found that the business community was suffering from a woeful ignorance of the financial implications.
Almost 20 per cent of office lettings in London during 2014 were through agents that represented the landlord and the prospective tenant, reported The Telegraph.
University of Leeds academic Adam Baker, who led the research with professor of international business law Gerard McCormack, said: “The single biggest issue that we identified was the need for a more open and honest debate about conflicts of interest.”
He added that guidelines from the Royal Institution of Chartered Surveyors (RICS) on conflicts of interest and transparency in commercial lettings did not go far enough to protect vulnerable SMEs.
“The RICS guidelines are too weak on the conflicts issue,” Baker said. “This could fuel a culture of acceptability.”