With so many Property companies hitting the headlines this month, it is sending one very clear and loud message to the private investor, do your due diligence on choosing who to work with BEFORE you instruct anyone.
Most landlord investors seem to think that all agents are equal, but this is not the case. The news has been littered with news of letting agents closing down and taking hundreds of thousands of client’s funds with them. When a letting agent closes in this manner, landlords often find themselves with no tenancy agreement, no gas certificate, no rent and no deposit. Usually before an agent closes the agent has stopped paying rent to the landlords for a few months, so the amount of money owed can run into many thousands. This is a story I hear time and time again all over the country and both national and independent companies have been responsible.
To protect yourself against this, make sure that the agent that you are using has some backing, very important is “client bond protection” to cover the “client account” in the event of them going down, if you use an ARLA agent this is a compulsory requirement. This means that in the event of the agent disappearing, at least you would get any money due to you, to find ARLA agents search on www.ARLA.co.uk I would also make sure that you always have your own filing system and check that your agent sends you copies of everything, signed tenancy agreements, inventories, gas certificates, EPC, deposit registration forms too, don’t abdicate responsibility to them, delegate it and monitor them.
But the problems of an unqualified or uncaring agent can go far beyond this, one agent I came across recently had extremely poor systems, and complaints about this company ranged from not paying any rent to their landlords, not doing any maintenance and even not answering the phone for days at a time. When we interviewed the agent on behalf of a very unhappy client, the plot got even deeper. Not only had the landlord not received any rent for 6 month, the landlord had in fact had a maintenance order put on her property by the council which had been sent to the agent, the agent had done nothing with this order and the time had lapsed for the landlord to respond (the landlord lived overseas) and the council were in the process of taking control of the property to carry out the repairs. For this “management service” the agent was charging the landlord 10%, management fee!
So what can you do? Always check that any agents that you decide to use for lettings and management services are “qualified” to do the job, look for accreditations such as ARLA (association of Residential Letting Agents) or RICS (Royal Institute of Chartered Surveyors). I would always ask around people that you know for a reference to a local agent too, you really want to know what their back end “management” service is like, do they do exactly what they say they do consistently?
If you are not from the area or don’t know anyone in the property world, visit the agent. You can get so much from a visit to the premises if you ask the right questions and use your eyes, is there paper everywhere, and are all the files in the filing cabinet, do the staff look harassed? Are they ignoring the phones? Do they have a designated locked key room or cupboard with “codes” not addresses on the keys, do they have a separate “management” department?
If the staff are expected to both, let properties and deal with maintenance, then I’m afraid they will generally focus on the lettings as they are more likely to have a bonus pay for this and the management will suffer as a result. Also ask them what there arrears process is and what percentage of properties do they currently have in arrears, less than 5% would be normal. Who does the “client account” ledgers and landlord payments, when are these done and how will you receive your statements.
Finally references, references, references! A landlord said to me last month, I’ve always bought my properties and then tried to find an agent to let them, I’ve now realised after living through a nightmare agent and then visiting you that I should actually be finding a great agent and then buying the properties near them!
Sally Lawson is a Leading authority on Residential Lettings and Management in th UK, Sally has ran Lettings Branches since 1990, and let over 5000 properties during that time. She has also worked as a consultant and trainer to Letting agents nationwide. Sally is actively involved with ARLA (the association of residential letting agents) as a regional representative and Media Spokesperson for the group, and runs the rapidly expanding nationwide Concentric Lettings operation and Franchised network. www.SallyLawson.co.uk