(Part 3 of a short series on how Landlords are acting for themselves. See part 1 and part 2).
I should start this article by saying that there are many, many wonderful letting agents.
But there are also many who are dire.
- Agents who rent properties to tenants without doing proper checking
- Agents who put landlords at risk by failing to protect tenancy deposits
- Agents who take ‘backhanders’ from tradesman who then pass this cost on to you
- And agents who spend landlords money on their own expenses and then file for bankruptcy, leaving creditors with nothing
Things are getting better, with mandatory membership of redress schemes, and regulations requiring transparency on fees. However there is still a lot to be done. Despite all the scandals, government still seem strangely reluctant to bring in mandatory regulation (which is the only real answer).
So there are many dire agents who probably should not be in practice, ‘out there’ and often (particularly if you are an inexperienced landlord) indistinguishable from the good agents.
So what do you do when you find that your agent has not acted in your best interests? Here are some stories of legal action taken and being taken.
First – the case of Hale v. Blue Sky Property Group
In this case (which I report on here, letting agents failed to follow up warning signs and discrepancies in the tenant information and blindly followed the credit reference companies report. Despite not being supported by her Redress Scheme, Mrs Hale brought proceedings in the Bristol County Court and won – and was awarded some £8,000.
Proving that it IS worth going to law – Judges are generally far more aware of agency law and the special obligations of agents than non lawyers – and will be prepared to penalise agents that fall short of the standards.
Second – the Foxtons case
Leigh Day are seeking to challenge Foxtons under agency law, for failing to properly disclose commission from tradesman. I interview the solicitor in the case here.
I don’t have any recent news of this case but if it is ongoing I suspect it will have a good chance of success. Landlords may want to band together to bring similar claims against other agents who make ‘secret profits’ from their clients in breach of agency law.
Third – The Property 118 Action Group
Mark Alexander, who was responsible for the West Brom mortgage victory has set up a landlord’s action group – one of its aims is to fund private prosecutions of rogue letting agents who steal rent and tenants deposits prior to closing down their businesses.
Indeed Mark tells me that they already brought claims against agents which were satisfactorily settled with landlords getting their money back.
Conclusion
Agents often breach their contracts and agent obligations – which landlords could, if they knew how and had the funding, successfully challenge in the courts.
If you are a landlord, particularly if you own several properties – the Property 118 Action Group sounds like a good idea to me. Mark Alexander wants to use the experience he gained from the West Brom case, and the contacts he made, to help landlords fight back against injustice and dishonesty.
Which is always a good thing.
There are also some solicitors firms who may be interested in bringing no win no fee claims, maybe a class action along the lines of the Leigh Day case. Anthony Gold are a firm who would be good for this.
Remember also that the Property Redress Schemes are also there to help both landlords and agents (although they did not help Mrs Hale in her complaint, they may be more helpful in other cases).
It would be nice if there was something similar to the Property 118 Action Group for tenants, now that legal aid is almost unobtainable. But that would, I can see, be more difficult to sustain.
Speaking as a person who has dealt with literally hundreds of dodgy agents in my neck of the woods for 25 years now it always astonishes me why any landlord or tenant would even walk through some of their doors. The shop front alone is often a dead give away. Tatty sign-age, faded out of date photographs in the window, old fashioned computer terminals.
There is one guy I know who doesnt have a website, his shopfront is a room tucked into an Indian restaurant with no photos of available properties. You have to step back and ask yourself “How does this guy operate?”
I also remember raiding a shop which had a canvass sign nailed above the window. When we got in with Police there were no files in the copious filing cabinets and at the back was an office hidden behind a two way mirror through which the owner could see disgruntled customers coming in and nip out the back door to her car.
She got done for importing cocaine in the end
And look at the deal they offering, is it a bargain or does it stink of desperation and cash in a brown envelope? Cheap is not always cheerful.