Choosing the wrong letting agent could cost YOU thousands!

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Choosing the wrong letting agent could cost YOU thousands!It’s devastating when you put your trust and faith into a letting agency, you pay them a monthly management fee; and all of a sudden they disappear with rent and the tenant’s deposit.

This week saw Smith & Jones Lettings in Market Deeping made bankrupt without a warning to their clients or time for them to act.

In this case it is thought at around 70 landlords have been left a position where they don’t know where to turn to for help.

Many won’t have contact with their tenants and many will be out of area making this more difficult. Some may not even know the office is no longer running – they will find out when the rent fails to show in their bank account.

I have already helped a number of landlords take control of the problem and told them what they need to do to remedy the problems left by the old agent. We have even seen cases of occupied properties without current gas safety certificate which is a criminal offence.

If you know anybody needing help and advice of what to do please ask them to contact me directly.

I have been involved in lettings working for Belvoir Peterborough & Cambridge since 2003.

I have seen a number of agents go out of business and leave behind many unhappy landlords with £’000’s of lost monies.

Many landlords aren’t familiar with the deposit protection process. There are different schemes; some which mean the deposit is held by a third party, and some when the deposit is held by the agent. An agent may use a deposit protection scheme which means they can hold it; with some schemes this leaves you completely exposed if the agent goes bankrupt; some schemes like the one we use insures the deposits, and protects you. Our client account is also bonded and ring fenced for security.

In the case of the agent in Market Deeping, they used My Deposits – a scheme that allows the agent to hold the deposits. Unfortunately there is no protection through My Deposits if the agent goes bankrupt. A stolen or missing deposit has be to paid back into a scheme…by the landlord.

A tenant could have paid the agent 1, 2 or 6 months rent in advance; the majority of which could have been retained by the agent. If the rent has been paid to the agent, whether or not it has been paid to the landlord – it is paid; and therefore lost if the agent goes out of business.

There are so many stories of agents going bankrupt and stealing client money. The biggest I am aware of is the Blueforces scandal that affected over 350 servicemen and women from across the military. More can be read here

The lettings industry until only recently was completely unregulated. There are many voluntary regulatory organisations that push for compulsory regulation for all letting agents throughout the UK.

When recommending agents to friends and family, remember that it is not just the management fee percentage that is important; accreditation and client money protection is paramount.

Why would an agent not be a member of ARLA? The only reason I can think of is that there client account is not complete and therefore would not pass the audit. You wouldn’t use a brain surgeon without the correct qualifications and skills – the same theory applies when choosing a letting agent to manage your investment and your pension.

If you would like to know more about investing and property management in and around Peterborough or Cambridge I have an ebook which is available for download via my member profile.

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Comments

  • Hi Terry,

    Consumer (landlord & tenant) education in paramount in making sure that consumers understand the benefits of working with an accredited agent, who will have client money protection in place, and also have redress with an Ombudsman Scheme.

    ARLA is not the only one though.

    There is NALS and RICS among others and there is SAFEagent, which is a signpost to firms with recognised client money protection in place.

    If an accredited agent goes bust, the tenant and landlord can have peace of mind that their money is protected and that they will be reimbursed any losses.

    Sadly, a large percentage of landlords and tenants are not even aware of deposit protection legislation.

    Therefore education, awareness, and community self-regulation is currently the only way to raise standards and improve consumer confidence in the PRS imho.


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  • Paul Barrett Member Profile Deleted says:

    There seems to be perennial with LL ignorance.
    Banks tend to be most at risk here if a LL doesn’t know what he is doing.
    It would not be unreasonable for a lender to insist they go on a 1 day training course
    before the bank would be prepared to lend them money.
    Had I been on such a course I would have saved myself hundreds of thousands of pounds.
    I have had too learn the hard and expensive way and have only learnt gradually via such sites as this and other well know ones.
    Surely this is not an acceptable state of affairs.
    Most banks lend to people once they have assessed that the borrower has a modicum of understanding as to the business they require the loan for……………………………not so if you wish to become a LL
    Most BTL mortgages are for far more than most small businesses request and yet prospective LL are never quizzed by banks about their knowledge of the business they are venturing into………………………………………..why do banks have this strange attitude!?
    It seems to me that if you apply for a BTL mortgage the banks presume you are automatically imbued with a sense and knowledge of what it means to be a LL.!!
    As evidenced by this latest LA doing a runner this is patently NOT the case.
    So why don’t BTL mortgage lenders do something about this silly situation.
    Essentially lending money to people who don’t know what they are doing!!!
    The cynic in me would suggest that prospective LL having been required to attend a 1 day course BEFORE they applied for a BTL mortgage; might decide NOT to bother becoming a LL.
    But this would surely be a small percentage of applicant and wouldn’t impact too much on the applicants eventually applying for BTL loans!!?
    A standard syllabus that the CML would devise would work across the country and assist the country as a whole with this vitally needed industry.
    Surely we need LL understanding what they are required to do before they become a LL!!!???
    In this industry a little knowledge is not and wouldn’t be a dangerous thing…………….indeed i believe it would be a very good thing!


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  • Debbie Prudhoe Member Profile Deleted says:

    Hi Terry
    My husband and I are victims of Smith and Jones bankruptcy. Our tenant’s bond disappeared and she has now decided to stop paying rent to recoup her loss. We are in Australia and so it’s wry hard for us to manage.
    Do you have an email address I can contact you on for advice please? Another local agent took over but they say they can’t do anything to help us as there’s no bond.
    Any advice you could offer would be really appreciated
    Many thanks
    Debbie


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  • When we left the UK 5 years ago, we rented our house out through Smith & Jones Lettings in Market Deeping. The same tenant is still in situ. About 6 weeks ago, I had an email from Sharon Smith, saying she was bankrupt and that our keys would be left in an office in the village for us to collect. I tried to contact her without success – we are overseas so this just made things more difficult for us.
    As our primary concern was to ensure the tenant still paid her rent, we asked another agent in Market Deeping to take over the management for us. A week later, they advised us that the tenant was concerned about her bond – she had been contacted by Sharon previously and told they were moving the bond to Smith & Jones account. To be honest, this is our first time renting our property, we did it in a hurry when our sale fell through and though it now seems gullible, we trusted the agents to handle the deposit and thought it was not our responsibility from the start.

    Yesterday, we received an email from our agent saying the tenant has contacted them as follows…’she will be vacating the property at the end of August, middle of September at the latest; she has also informed me that she will not be paying any further rent, and that any rent due could be taken from the deposit.
    As you are aware we do not have access to the deposit as this is an issue with Smith & Jones so you would have to liaise with Sharon on this issue if possible, we would have no further involvement.
    As there is no inventory for us to compare the property to and no deposit for any monies to be deducted if necessary we will be unable to conduct the final inspection however from Tracey’s recent inspection the property has been kept in good order. ‘

    The tenant hasn’t given an end date, merely a suggestion of when she will be leaving. She won’t pay any rent in the meantime; the house is part furnished and we never received an inventory from Smith & Jones so I’m concerned she could take furniture and we could do nothing about it; also damage to the property and outstanding bills could be an issue.

    I understand she would have paid 6 week’s rent as a bond. I’m sure we are liable to replace her bond if the agent’s have taken it, so I am resigned to be 6 weeks rent out of pocket, but what about the other issues that may come up?

    I’m desperate, stressed and file like it’s all out of control.

    I wondered if it would be a good idea if I paid the bond amount to the current agents ?

    Can anyone offer me any advice please?
    I’d be so grateful.


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  • Mark Alexander recently posted…The GOOD Landlords CampaignMy Profile


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