How To Avoid A Lettings Nightmare

Today has been another exciting media day for me – my property management agency, Gorgeous Homes, was mentioned in a great feature which Claer Barrett wrote for the Investors Chronicle.

Claer has been investigating the scandal of buy to let and the number of rogue letting agencies in the country and interviewed me for my thoughts and opinions on the market.  Her article “Avoid a Lettings Nightmare” is the feature in Investors Chronicle 5 Nov-11 Nov 2010.

The lettings agent market is currently unregulated and anybody can open as a lettings agency. This is a worrying state of affairs as we have seen a rise of low cost agents open, get loads of landlords in, and then the lettings agency closing up shop and taking landlords’ and tenants’ monies with them.  I have every sympathy with the landlords and tenants who have been stung by these as this is nothing but daylight robbery.  In short, it is theft.

I have always advocated that if it seems to good to be true then it usually is. If an agent is claiming they can offer such a cut price service with no upfront fees you have got to ask yourself where are they making their money? Landlords need to stop and think how that agency is going to make any money to pay for the running of an agency (which is pretty high when you include advertising, staff costs, premises, insurance etc). Over the years I have had many landlords come to me asking advice on what they can do when a letting agency has taken their money, not paid their rent or gone bust and taken the tenant deposit with them.

I have, on many occasions, stepped into the fray, contacted tenants on their behalf and luckily managed to resolve many situations.  However, there are many more that I cannot as the landlord has contacted me too late – the agency has gone bust and has taken their money with them.  At that point, the most I can do is assist them in sorting the liability of the deposit and helping them get the legal advice they need.

The article offers some good tips to ask letting agents, such as:

– Are they part of a re-dress scheme?

– What will you be charged for?

– What tenancy deposit scheme do they use?

– Do they have client money protection?

These are all good questions, however I know of many big name franchisees who could have answered yes to all of the above and the landlord still lost their money when the letting agent went bust.

The key for me is ensuring YOU keep your eye on the ball. That means actually checking that the letting agent is doing their job. There is no shame in asking for the receipt/ ID number of the tenant deposit which has been protected, moreover if you are due rent and it has not been paid – call and find out why.

There are some great letting agents out there who can help you manage a property profitably – but please remember you have to pay for this service. If it seems to good to be true…remember it usually is!