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.