Many letting agents are good, some are outstanding, but it has to be said that many others offer a poor service.
Here are a few things they may be keeping quiet about
1. They do not have any relevant qualifications.
The letting agent industry is unregulated. There is nothing to stop any Tom, Dick or Harry setting up shop with little experience. Many do.
This is why you should ALWAYS look for an agent which is regulated by ARLA, RICS, NALS or at the very least the Property Ombudsman.
2. They are spending your money
Letting agents hold thousands and thousands of pounds of other people’s money. As there is no regulation for the industry, they can keep this where they like. Sometimes it is just put in the firms general bank account along with their own money (or more likely, overdraft) and spent on their own expenses.
This is why (again) you need to use an agent regulated by ARLA or RICS or one which has signed up to Safe Agent.
3. They have not referenced your tenant properly
Finding a good tenant is one of the main reasons why people go to an agent. However, I have had cases where I have been instructed to evict a tenant for rent arrears and we (ie the landlord and I) find out that the initial referencing was unsatisfactory. Many landlords have also complained about this to me.
The problem is exacerbated by the fact that many agents refuse to provide details of any of the referencing material to the landlord, claiming that they are not allowed to under the Data Protection Act. I wrote about this here.
4. They are getting kickbacks from repairmen used for your property repairs
Not all agents do this of course, but it is not unknown for agents to have cosy relationships with tradesman, with the hapless landlord being charged over the odds.
5. They are encouraging your tenants to leave at the end of the term so they can charge you for finding a new one
I wrote about this here. Again reputable agents wouldn’t dream of doing this, but apparently it does happen.
All of this is totally against the principles of agency law. Under agency law the agent has a ‘duty of good faith’ to deal with his principal (in this case the landlord) fairly and not put his own interests first.
Good agents will do this as a matter of course. Others however, won’t. Which category does YOUR agent come into?
(NB Do you really need to use an agent? >> Click here to find out)
Corollary to #5 – they insist on signing up to a new fixed term every 6 or 12 months and charging both landlord and tenant vast sums to effectively put something through the photocopier and change the dates round.
Also, even big-name agents can be dodgy at times, viz. the OFT -v- Foxtons affair, and the contents of the BBC’s “Whistleblower” episode on letting agents in 2006.
Great article, Tessa.
As JS says, renewal fees are another letting agent favourite, which are completely unjustifiable in my view.
Unfortunately the decision in the Foxtons case did not rule them to be unfair, so landlords should check their agent’s small print thoroughly before signing (which they should do anyway of course).
I think that it is mostly London agents who have renewal fee clauses in their find tenant only contracts.
Foxtons came to an agreement with the OFT that their clause would only charge for 2 years and be at a lower rate of interest, so any clause that does not say that will be at risk of being found ‘unfair’ if challenged.
Speaking as an agent, if your agent is doing your renewal then I’m assuming you’re using some kind of management service rather than just Intro-Only?
If so, then there is a lot more to managing a tenancy than simply doing a renewal, which in itself is more complex than changing a date and sticking it through a copier!
Before you generalise about renewal fees I think you need to clarify if it is a one-off payment, or in additon to a amangement fee and exactly what you’re getting for your money.
I’m sure a minority of agents – like any other business sector – are less scrupulous than others. For example, demanding renewal fees even where the tenancy has been renewed via another agent, is certainly smart practice.
If it’s all as simple as you say it is then surely you should dump your agent and manage your own tenancy? However, in reality you’ll find it’s very time consuming and requires specialist knowledge, particularly when things go wrong.
Aside from all the mundane but time consuming jobs involved in running a tenancy, your agent will also make sure everything complies with latest legislation and if they don’t, then you can make a claim against their professional indemnity insuranace in the event that things go wrong. What protection do you have when you mess up whilke trying to manage your own tenancy?
One of the biggest problems is Landlords failing to read the Terms & Conditions of Business! As a general rule, if your Letting agent has a Terms & Conditions consisting of little more than a single sheet of A4 then you’re asking for trouble. The problem is, in making things more transparent you end up with T&Cs 20 odd pages in length and the Landlords simpy don’t read them and wonder why they’re surprised later.
Jamie, I am a letting agent myself, not somebody who has been stitched up by one, as I think you may have assumed.
Regarding renewal fees, Tessa has clarified with additional information above.
Agree with your comments on the T&C.
Management fees are all well and good if the agent is actually managing the property. But usually renewal fees seem to be thrown in atop that, and to renew a fixed term tenancy it is sufficient to copy the agreement and get it re-signed and re-dated. So how does that cost £175.00 atop the management fee, hm?
Really important and insightful blog Tessa. Thank you. I have linked to it from Property Tribes.
I believe that Landlords should vet their prospective lettings agent as diligently as they expect their lettings agent to vet prospective tenants!
I think it is also important to mention that Landlords should only work with a lettings agent who subscribes to client monies protection.
There have been many fly by night lettings agents who have gone bust taking LL’s and tenants money with them.
You can look for the #safeagent mark or ask to see evidence of which client monies protection scheme the agent has signed up to.
Thank you everyone for your insightful comments. Thanks in particular Vanessa to linking to this from Property Tribes.
I fear that these problems will continue until the government finally decides to regulate letting agents. Which looks as if it will not be for some time, sadly.
I always feel so sad when I learn of agents who have gone bust taking thousands of landlords money with them. This can have a catastrophic effect on landlords particuarly if, for example, they are pensioners who look to the rent for their main income.
True Tessa.
However, we as a community can self-regulate to a degree by using community review and sharing experiences of good and bad lettings agents via the social web.
Education is also paramount, hence why your blog is so important.
Someone has already commented on Property Tribes that it has never crossed their mind to “vet” a lettings agent!
Landlords and tenants can be educated by us, as a community. I actually believe that to be healthier than govt. stepping in.
Valuable blogs like this are an important part of that process.
I did a post here on how you can tell a good letting agent from a bad one http://www.landlordlawblog.co.uk/2011/09/13/how-do-you-tell-a-good-letting-agent-from-a-bad-one/ – it has some quite useful comments too.
When I get a moment I will do a post on tribes with a link to it.
@Jamie, A renewed tenancy agreement takes no special knowledge to add to the original. Change of date is all that is required, and if a fair fee is a reasonable reflection of the true cost how can any agent justify £150, often charged to both landlord and tenant for a simple amendment?
I am in court tomorrow, defending a rent arrears claim against a major and well known letting agent in South London where the arrears have accrued because said agent were so incompetent that they couldnt even get the date right on the agreement and didnt sign it. Despite Housing Benefit bringing the problem to their attention they didnt correct it. Result? No HB payments and agent suing for arrears that they created through their own ineptitude. Losers? the tenant and me for the hassle of this nonsense claim and the landlord who has lost cash because his agent, a well known name have little idea of the legalities involved
I agree with Vanessa, Lanldords should know how to vet agents, even the respected names come up short so many times
Ben, I agree with you. If you’re intro-only then high renewal fees cannot be justified. My point was that people need to clarify exactly what they’re talking about when they criticise ‘renewal fees’ en masse.
Renewal fees can mean a whole raft of drifferent things and be charged in different ways.
Lots of people assume the majority of agents are useless rip-off merchants whereas the opposite is true in my experience. Perhaps it’s just the different areas in which we all live…
At the risk of hijacking this thread, with the mention of SafeAgent/CMP, I would be interested to know of any stats that back up the concensus of all these rogue agents going bust with their client’s money. Is it happening as frequently as we are led to believe?
@jamie Judging by the posts we get on Property Tribes, agents going bust is a worryingly regular occurance.
Paul Shamplina of Landlord Action told me a few weeks ago that he is getting an increasing number of calls from Landlords about agents who have gone bust.
I’m a regualar visitor to your Tibal Talks forum and I wouldn’t say it’s that regular (unless I’m missing something? – I can’t honestly say I read every single post).
Sure, there have been one or two well publicised cases in the last two or three years and there is always some hearsay, but I just don’t see the evidence of lots of agents going under and taking their clients’ money with them.
Also, with respect, to Landlord Action, the number of calls may well have increased, but what are the numbers?
I’d be intersted if anyone has collated any actual data? Have NALs ARLA, Safe done any research on this?
This thread has already gone way off topic (sorry) but I’m just wondering if the regulation that everyone is calling for would really be worth it once agents have passed on any addional costs to their landlords. Individually, yes, some of those who have lost out might have benefited from increased regulation but not necessarily the industry as a whole.
Thanks Jamie, and sorry for not recognising you from PT, but your name on here does not give me much to go on!
I would imagine that NALS do have some stats. and I will make some enquiries and report back.
Even if only a few agents go bust, they might have several hundred properties each, so the number of LL’s & tenants affected could be quite significant imho.
There are links to two high profile cases in this post here http://www.landlordlawblog.co.uk/2011/07/11/when-will-government-deal-with-the-scandal-of-our-unregulated-lettings-industry/
I think that landlords lost substantial sums in both cases
As a London landlord I would welcome a set charge as is suggested on various comments here. I have purely Let only with the Agencies I have used and have always had to still pay a %age commission for renewals, even when I have negotiated them myself and arranged for a new tenancy agreement to be signed (prepared by myself). I have searched for a lettings agent in my area (South East London) who do not charge a % renewal and far come up with none, even with the newer agencies out there. Outside of London I have been able to agree a small renewal payment with the Agencies used, and even then have not ended up paying it as I have dealt with the renewal myself.
I truly believe this is a London problem. I have negotiated the renewal commission down but only slightly. All other agencies I have dealt with will not go below this figure either so there is obviously some collusion between them.
So my renewals are in the region of £800 to £1200 per annum each year for each flat.
I know of several Lettings Agents who do an excellent job. All these Agents are privately run companies where the owner is very involved in the day to day running of the business. These people tend to know the business of a landlord and keep their clients safe, most are not members of any organistion. Until recently I did not realise that ARLA and SafeAgent only oversee the accounts of their Agents they have no other controls nor sanctions to ensure that the Agent is complying with the law on behalf of Landlords. A landlord should simply remain in control of the tenants deposit and protect it himself, thus removing the potential of picking up the pieces if the Agent goes OOB. It is the landlord who will be ultimately responsible to the tenant in any event.
My question is Why are AST’s renewed at all, who not allow them to become Statutory Periodics? I have SP’s that have been running for years and should I need to remove a relucatant tenant I can simply use S21 – not that I would ever want to remove a good long standing tenant, I hope that they stay forever.
Yvette I’m a South East London TRO feel free to chat.
@Mary. Yes size and national corporate identity means jack really. An agent thrives or dies on their personal input. While agents lack any strict regulatory code ARLA< RICS etc is pretty meaningless if the agent doesnt have the personal committment.
When I first saw Safe Agent I was impressed and immediately stuck a name known to me in the search engine, only to find them in there. OK they may have client money protection but it doesnt mean they are trustworthy in other matters.
Safe Agent may provide some security for landlords concerned about their financial cover but thats it. It means othing to tenants looking for a safe deal, and lets not forget that tenants are 50% of what is going on, not just landlords.
An accreditation body can promote all the standards it likes but if it has no teeth what is the point? AND if it exercises the teeth it does have and expels a reclacitrant member who would know anyway, when everything in the accreditation world is so fragmented?
@Mary
“My question is Why are AST’s renewed at all, who not allow them to become Statutory Periodics?”
Generally because one or both parties want a minimum level of security not afforded by a periodic tenancy. If it were my home I wouldn’t want the uncertainty of a periodic tenancy.
Just to clarify the point you made concerning ARLA. Their 18 page code of practice (http://www.arla.co.uk/codes-of-practice/) covers just about every aspect of letting, not just accounting. They audit 10% of memebers annually on all the ARLA bylaws. Admittedly, the worst that will happen (depending on the severity of the problem) is a warning and reassement, followed by revocation of membership if the problem isn’t resolved.
I would too Jamie, in fact I have just agreed a further 12 months on mine which made me breathe a sigh of relief as for the past 2-3 months I have been on tenterhooks as to whether or not we would have to leave again (tenants not having the choice in the matter)
Mary I know takes special and personal care with her tenants and ensures her people feel they are living in their home but that is very rare.
On ARLA, I have nothing against them, or NALS, or RICS etc. The problem is with accreditation as it stands generally. If they set joining standards too high, which tenants and council’s would like nobody joins, if its too low then it is useless to the public and is simply income generation for the accreditation body and another menaingless sticker for an agent to put in their window.
It has to be said that a decent agent shouldnt need any acreditation at all and the worst ones can have as many stickers as they like, it wont mean Jack. A single regualtory standard – with genuine teeth is the only way to profesionalise the industry and drive the sharks out.