Can my letting agent withhold rent to cover water leak repairs?

Sorry to sound harsh but if your cashflow cannot allow 1 months rent to be in holding for an unspecified amount of time you really need to question yourself as a landlord should something untoward happen i.e. tenant stops paying rent.

If the rent money has been used to pay the sub contractor and then this paid invoice needs to be submitted to the insurance to pay you back ultimately yes as the agent is acting on your behalf so are able to take “reasonable” decisions. This sounds reasonable to me and all part of the joys of being a landlord.

Speaking from the point of view of a letting agent, I feel it is really important to have contractors on side and their prompt payment ensures the ability to be able to contact them in the future and to get work done efficiently.

It may be that your agent has a good working relationship with them and they are in agreement to waiting for the insurance payout to cover their invoice - it would also depend on the circumstances of the leak and who is liable i.e. does the buildings insurance cover it or was it the fault of the tenant upstairs?

It also means that the speed in which this repair has been done will ensure your tenants are happy and rent continues to come in.

I am sure you are more than able to contact the insurer directly. Give them a call.

Not having a contingency fund to pay for these emergency repairs sounds like a bit of a slippery slope but hopefully it won't happen again

What's the alternative to you paying? Do you really think its reasonable to ask the agent to pay for this until the insurance money comes through? What would you have done if you were self managing?

It sounds like you cannot afford to be a landlord, unfortunately.

If the agent has instructed the works, then in the first instance you will need to pay it. It can then be reclaimed from the insurer or the management company (depending on the excess). Getting money from insurers can take time, hence the need for landlords to hold a reserve fund.

It doesn't sound like the agent has done anything wrong; I suspect their reluctance to return calls is because they have no news and don't have time to be mithered.

The block management company have agreed to the claim but have they put in an insurance claim?
Will the insurance assessor need to approve the works need doing? Agree that it was OK for the works to be done? Will honour the costs LESS the excess? Will pay the contractor direct or pay the management or pay the Leaseholder?
How much is the excess? Does the management company pay this or is it the Leaseholder's responsibility to fund the excess?

This is a tax deductible expense
Getting trades people to do work well and finding the right people is sometimes hard work.
So we Always pay anyone who does work on our rentals straight after the Job is done
Sometimes with big extensions we pay in stages
So I am afraid the idea of making a tradesperson wait for an Insurance claim is a Very poor idea

As everyone else has said. The agent is literally doing what you pay them to do. This is a business relationship - if it causes you financial harm, you need to be able to accept that's your fault for not managing your business correctly, not the agent's fault.

You need a proper plan for when problems happen, like a tenant stops paying or moves out or a boiler needs replacing.

If you don't have enough properties to have cash flow to deal with these issues, I suggest putting around 10-20% of the rent aside each month to cover these unexpected costs.

Paying the contractor promptly must be the right thing to do. As to whether your agent is acting within the terms of their agency in using incoming rent to do so, that depends on the terms (express AND implied) of your agreement with them. Read it.

Why isn't the insurance paying the contractor directly? Contact the insurance and make sure they know what's going on