Whether you are a landlord or a tenant, you may not realise it, but anyone can become a letting agent.
Despite the fact that there are in excess of 100 checks a property needs to pass to be legally let, the government, local authorities and people like trading standards do very little to make sure a letting agent is operating a legitimate business.
How to choose a good letting agent
How to avoid a rogue landlord
The problem is so bad that when most companies and sectors are desperately asking governments to reduce regulation, the ‘good guys’ in the lettings industry are desperate for regulation to be introduced.
The reason is that self-regulated letting agents who belong to schemes such as NALS, SafeAgent, RICs and UKARLA are fed up with losing business to letting agents who offer ‘cheap fee’s’ such as 5% commission rates. Any agent who abides by the law would find it impossible to make money at 5% commission – I know, I’ve reviewed the numbers!
How to choose a good letting agent
Agents will run off with your rent!
It might not happen, but it has to many a landlord. If your letting agent doesn’t belong to a self-regulated scheme, then they are unlikely to have ‘client money protection’ (CMP). What this means is if a member of staff steals the rent, or the business goes bust, your money is protected in an account which is insured.
If an agent doesn’t have CMP, then you are at risk of losing some if not all of your rent, so if it’s not passed on the day you expect, you need to call straight away. Even if you do, if they have spent all your money, you have very little chance of getting it back.
How to choose a good letting agent
Choosing the right letting agent to work with
Most people don’t choose the letting agent or landlord before they choose the property – and I think you should! Here’s more about this on the interview I did for ITV London, you can watch the video.
Basically if you choose a property and don’t check the agent is self-regulated and has client money protection, you won’t know if:-
If your deposit has been protected legally in a tenancy deposit scheme
Your rent is safe when the tenant pays it to the agent
Your property passes all the legal requirements
A dispute over maintenance is the fault of the landlord or tenant
The tenancy agreement is up to date and doesn’t have any unfair terms and conditions
How to rent a property quick guide
What about landlord or letting agent licencing or belonging to a property ombudsman?
By the end of 2014 or start of 2015, in England, all letting agents, by law will have to belong to an ombudsman. This is good news in that it will offer you a free, independent complaints procedure and if agreed, money to compensate you for things which have gone wrong.
However, all this requires is the letting agent filling in a form, securing professional indemnity insurance and then paying their membership fee.
Unfortunately belonging to these schemes doesn’t require client money protection (CMP) so it’s not the most secure way of letting a property through an agent. NALS, RICs, ARLA and UKALA offer much better protection.
In Scotland, all agents (and landlords) already need to be registered and you can find out more at Renting Scotland.
In Wales, currently it’s similar to the English system, but this is expected to change dramatically in 2015, possibly as early as April 2015 when any landlord or letting agent will need to be licenced. The big change will be if you are self-managing your property, you won’t be able to do this anymore unless you join the existing self-regulated schemes like NALs, ARLA or RICs. Being a member of a landlord association won’t allow you, at the moment, to manage your own property.
In Northern Ireland, all landlords have to be licenced too, but agents don’t have to be as yet.
To make things simple across the UK, always use a letting agent who is ARLA, NALs, RICs or UKALA registered as they are the ones that abide by the minimum laws but offer more in terms of client money protection.
