How greedy agents are being challenged by their landlords

(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.