It’s time to protect yourself against rogue letting agencies
Could you afford to lose up to a year’s rent? If you don’t check out your letting agent and keep on top of your rental payments, that’s exactly what could happen. The lettings market is getting tougher. Our prediction is that many lettings agents could go belly up. If you have your property with one that does, how will you get back your unpaid rent?
Why is the lettings market getting tougher?
The Tenant Fees Act is going to make finances tough for many letting agents. A report from Fixflo last year forecast that agents will lose between 10% and 30% of their annual revenues because of the ban. For many, this will wipe out their profits. Almost half of agents told Fixflo that they are considering pulling out of the business because of the ban on tenants’ fees.
If you are using the services of a letting agent and it closes its doors, would you lose money? Does your current letting agent owe you any rental payments?
When a letting agent closes its doors, it can be devastating
An estate agency in the West Midlands closed suddenly in May. Landlords have reported being owed thousands in rent from their tenants. Holmes estate agents shut its offices’ doors in Dudley and Wolverhampton, without warning its clients, and leaving landlords high and dry.
Landlord James Robinson told Dudley News that he had never seen anything like this before, and he had been a landlord in Kingswinford for 15 years. The company owed him more than £4,000 in rent – payments that have been due during the last eight months. Mr Robinson said that he had been chasing the company but that they had not returned his emails or calls.
If your letting agent suddenly shut its doors, how much rent would you be owed?
It is not only landlords that are left high and dry
Before we get carried away on the side of landlords, it is worth remembering that others are affected when a letting agent shuts its doors for the last time. Tenants should be most protected, but this isn’t always the case.
Tenants Sharon Lees and Ryan Barlow are both owed deposits. Of course, these should have been protected in a Tenancy Deposit Scheme, but the tenants can’t get hold of anyone from Holmes to learn if they have been. Their deposits amount to £900 and £1,050 respectively.
The effects don’t stop with tenants, either. Contractor Mark Weaver, who did maintenance work for Holmes for three years, is also owed more than £4,000.
“It is really worrying, but what can you do?”
This is what James Robinson asked Dudley News. If the company has closed its doors for the last time, and if it has gone into administration, the answer is probably, “Join the back of the queue.” However, there are some actions you can take to protect yourself from becoming a victim of a rogue letting agency:
· Make sure the agent is a member of a national body, such as ARLA Propertymark
Our membership of ARLA Propertymark ensures that we work to the highest standards. Landlords and tenants suffer when they deal with agents who don’t comply with the law. Financial losses can run into thousands of pounds. As a landlord, make sure that your agent is a member of a national body that regulates and certifies the agent.
· Make sure the agent uses a tenancy deposit scheme
This is a legal requirement. All agencies should deposit the tenant’s deposit in a registered tenancy deposit scheme. This ensures that the cash is not held by the letting agent, but in a separate account for the benefit of the tenant. Ask to see proof that your letting agent uses such a scheme. The tenant should be able to contact the scheme to confirm this, too, and be provided with details when they pay their security deposit.
· Ensure that rent is paid promptly
When tenants pay their rent, they will pay it to the letting agent. But it’s your money (less property management charges/lettings fees, and maintenance fees, of course). You want it in your account as soon as possible. There should be no reason for the letting agent to retain your tenant’s rental payment in their account.
Here at Ezytrac, we pay your rent into your account the business day following the day that we receive it. Our advice is this:
If your letting agent is late paying you, despite being paid by the tenant, chase them for the rent immediately. If they don’t pay it within a few days, move your business elsewhere. Don’t hesitate. Making you wait for your money is a clear sign that the agent may not be financially sound. If they go bust owing you money, you may find you have to write it off.
There. Three easy things you can do to help protect yourself from a letting agent who may not be able to survive the ban on lettings fees. Don’t get caught out in a market that could see almost half of lettings agencies pull out of it.
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