Most tenancy agreement will hold a clause saying that you have the right to enter in case of emergency or for essential maintenance, but if the tenant stands in the doorway refusing you entry or is explicitly clear that they do not want you to enter the property, you actually have no right to “force” your way in or to ignore their wishes and go in anyway, a tenant has to “give you permission to enter”. Now if the tenancy agreement says you can enter with reasonable notice and you give reasonable notice and then you enter, that is absolutely fine as you have written permission, BUT if the tenant calls you up and says NO you can’t go in, that this would override the written permission as it is more recent and you should therefore NOT enter as you no longer have consent to do so.

With this one you are caught between a few different regulations, namely the Gas safety regulations and the requirement on you as the landlord to enter the premises to do a gas certificate, the landlord and tenant act 1985 section 11 obligations on you as a landlord to repair and maintain your property as well as the tenants right to quiet enjoyment. It does state that your tenant has to allow you access to do essential repairs, in the same act, but unfortunately if they refuse, to force your way in would be a breach of their rights too. Entering into a property against your tenants wishes would give them an opportunity to start a claim against you for Harassment, under the protection from Harassment Act 1997.

Over the last 6 months I have been posing the above conundrum to landlords across the country at landlord training and networking events and asking them what they would do and the answers are generally the same, here are some of the most common I have received.

A common answer to my question was “I would force my way in or get the heavies round” under the Protection from Harassment Act, 1997, any form of intimidation or making the tenant feel they may be assaulted or suffer from battery, is deemed as Harassment, so this is definitely not a course of action you should consider

Many landlords feel that they would “just go in when the tenant is not there”, If in fact you were to enter onto the premises when they have clearly refused consent, they would have a right as tenant occupiers to start a claim against you for Trespass as they have a right over the premises as a tenant just as an owner occupier does.

Quite a few landlords said that they would “call Transco and get the gas disconnected.” This would be a breach of their “Rights to Quiet enjoyment” as this would prevent them from using the property as they would expect to be able to do so normally and they would have a very strong case against you.

Many tenants have managed successful claims against their landlords for entering their properties when instructed not to do so as most landlords when asked, feel that they have the right to enter, due to their obligations under the landlord and tenant act amongst other regulations, when in fact they do not.

The Landlord and Tenant act section 11, subsection 6, does in fact state that the tenant must allow you entry to the property, however, like anything in this country, if someone does not do what you want them to do you cannot just beat them into submission, you have to follow a “process” to encourage them to do what is required of them and this is no different, just like rent arrears. If your tenant will not allow you entry into the property, you must threaten to take them to court for “access” and then follow through with it if they still won’t let you in. In practice, over 21 years in the industry and managing over 5000 properties during that time, we have never had to actually take any tenant to court for access, but we have had to “threaten it” many times, that generally seems to be all that is needed to get access.

The problem with arrears is that they can make you feel very emotional and upset; they are living in your house and not paying you for it. This has lead many landlords to cut off services to the property, harass tenants at work, telling their boss they are in arrears, turning up late at night at their home to ask for money, sending the heavies round or changing the locks. All these could be deemed harassment in a court and therefore should not be part of your arrears chasing process.

There have been many cases of Landlords suffering at the hands of what we call in the industry “professional Rogue tenants”. These tenants make money from uneducated landlords, who take matters into their own hands and do not follow the law with regards chasing arrears and therefore fall foul of the tenant’s rights to quiet enjoyment.  By not following the rules, tenants who have access to all the information they need via the internet can use this against a landlord, and if they make a successful claim, can be awarded thousands of pounds in court and end up being branded a Bad Landlord in the media.

There have also been some more horrific cases of landlords being hurt, one landlord was stabbed 83 times by his tenant when visiting to chase up on arrears unpaid, you have to ask the question, is it worth it?

So bearing in mind the Health and safety aspect, the litigation aspect and the moral aspect its worth educating yourself as to how to follow the law to the letter and chase arrears effectively and professionally.

Most tenancies in this country are Assured Short hold Tenancies and therefore I shall deal with these in the main in this article.

Rent is normally due in advance in a tenancy agreement and also it is the tenants responsibility to get the rent to you by the due date, therefore, as soon as a rental payment fails to come in, the rent will officially be 1 months’ rent in arrears and the clock starts ticking. You need to start communicating with your tenant via telephone, email, and letter, whichever way you can to establish what the problem is and get an arrangement to pay. You may well get various excuses as to why the rent has not been paid, but you need to inform the tenant, that although the issue is unfortunate, the rent still needs to be paid. Follow this up with a letter confirming the arrangement to pay and make a note for 7 days later.

In seven days time (this will now be about 14 days in) do the process again, a heavier conversation and heavier letter, if there is a guarantor, contact with them needs to be made now and inform them of the non payment, confirm this again with a letter. The 14 day letter and conversation is along the lines of, the arrangement to pay has not been kept, the rent needs to be paid by return and court action will be taken if necessary to recover the monies due.

7 days later if the money is still not forthcoming, (now 21 days in arrears) go through the process again, Letter, phone call again to guarantor if applicable. You are going to inform them here that the rent of £xx remains unpaid, and despite numerous attempts it has still not been paid, therefore rent must be paid by return and failure to do so will result in court action being taken in 7 days time and that no further correspondence will be made with them.

When the second month’s rent is due, the rent is effectively 2 months in arrears now and therefore you are able to start legal proceeding, of which the first step is to issue a section 8 notice. This is a notice informing the tenant that you are going to start legal action against them in 14 days. You will have to cite the grounds on which you are going to use against them (the grounds of the housing act they have broken) usually 8/10 & 11.

You have to wait for 16 days (allowing 2 for service) and then you can apply to the courts for a possession order and recovery of your arrears due.

Throughout the process, remain calm, professional, try to act as you would expect a bank representative to be with you on an arrears call, non emotional but not budging! A lot of landlords make the mistake of letting tenants off sometimes, or being lenient, and this too can be a recipe for disaster, as they learn that no can sometimes mean yes, and you very often end up in a spiral of lack of performance that just gets worse, so it’s just not worth it, they have signed for the property and must adhere to the terms.

If you would like any more information on arrears, I have written a free downloadable booklet on the subject at www.sallylawson.co.uk

Most landlord investors seem to think that all agents are equal, but this is not the case. The news has been littered with news of letting agents closing down and taking hundreds of thousands of client’s funds with them. When a letting agent closes in this manner, landlords often find themselves with no tenancy agreement, no gas certificate, no rent and no deposit. Usually before an agent closes the agent has stopped paying rent to the landlords for a few months, so the amount of money owed can run into many thousands. This is a story I hear time and time again all over the country and both national and independent companies have been responsible.

To protect yourself against this, make sure that the agent that you are using has some backing, very important is “client bond protection” to cover the “client account” in the event of them going down, if you use an ARLA agent this is a compulsory requirement. This means that in the event of the agent disappearing, at least you would get any money due to you, to find ARLA agents search on www.ARLA.co.uk  I would also make sure that you always have your own filing system and check that your agent sends you copies of everything, signed tenancy agreements, inventories, gas certificates, EPC, deposit registration forms too, don’t abdicate responsibility to them, delegate it and monitor them.

But the problems of an unqualified or uncaring agent can go far beyond this, one agent I came across recently had extremely poor systems, and complaints about this company ranged from not paying any rent to their landlords, not doing any maintenance and even not answering the phone for days at a time. When we interviewed the agent on behalf of a very unhappy client, the plot got even deeper. Not only had the landlord not received any rent for 6 month, the landlord had in fact had a maintenance order put on her property by the council which had been sent to the agent, the agent had done nothing with this order and the time had lapsed for the landlord to respond (the landlord lived overseas) and the council were in the process of taking control of the property to carry out the repairs. For this “management service” the agent was charging the landlord 10%, management fee!

So what can you do? Always check that any agents that you decide to use for lettings and management services are “qualified” to do the job, look for accreditations such as ARLA (association of Residential Letting Agents) or RICS (Royal Institute of Chartered Surveyors). I would always ask around people that you know for a reference to a local agent too, you really want to know what their back end “management” service is like, do they do exactly what they say they do consistently?

If you are not from the area or don’t know anyone in the property world, visit the agent. You can get so much from a visit to the premises if you ask the right questions and use your eyes, is there paper everywhere, and are all the files in the filing cabinet, do the staff look harassed? Are they ignoring the phones? Do they have a designated locked key room or cupboard with “codes” not addresses on the keys, do they have a separate “management” department?

If the staff are expected to both, let properties and deal with maintenance, then I’m afraid they will generally focus on the lettings as they are more likely to have a bonus pay for this and the management will suffer as a result. Also ask them what there arrears process is and what percentage of properties do they currently have in arrears, less than 5% would be normal. Who does the “client account” ledgers and landlord payments, when are these done and how will you receive your statements.

Finally references, references, references! A landlord said to me last month, I’ve always bought my properties and then tried to find an agent to let them, I’ve now realised after living through a nightmare agent and then visiting you that I should actually be finding a great agent and then buying the properties near them!

Sally Lawson

2/2/2011

The correct procedure for a Management Contract, is where an “experienced” landlord hires a “competent” property Manager to let and manage his rental property for a period of say 3 years. The advantage to the Owner is seen as a “guaranteed” fixed monthly amount coming in and the hassle of dealing with tenants taken away. The problem lies with the fact that the Landlord/owner remains fully legally liable for the terms of his mortgage, property & tenancy even though he has passed on the management of the property to someone else. Therefore the landlord needs to have the experience to “manage” the “property manager” to ensure that he is carrying out all the health and safety issues and legal aspects correctly. Unfortunately this is where many of the problems are arising as the Landlord/owners are generally inexperienced and naive.

Although this seems quite an innocent transaction and not that different to employing a letting agent (but for a longer more definite period with more authority given to the property manager) unfortunately these arrangements have mutated into something quite different indeed and positively dangerous with many potential hazards for the inexperienced landlords who may not be aware of their duties, which could lead to huge financial penalties or in extreme cases imprisonment.

Where things get tricky, and i am seeing this time and time again, is where people are letting their property to a property manager and using a form of “tenancy agreement” as a contract, giving consent to “sublet”. This is not the correct way to do this and does not impose the correct responsibilities on each party and will not lay out what is required by each party. But more importantly, if there is a mortgage on the property then this will normally violate the terms of the mortgage for the owner and leave him in big trouble with the lender. Most mortgage companies, (buy to let or standard homeowner mortgages) will not allow landlords to allow “subletting” in their agreements, as they need to be sure they know who are residing in the property at any time so that they may repossess the property if they need to as allowed for under section 101 of the Law of property act 1925.

Secondly another area i have noticed that people are becoming unstuck, is where landlords are creating these agreements with property managers and the managers are letting the properties on “room by room” basis, or “multi letting” to create higher cash flow. There are a few issues with this.

Firstly, the landlord/owner needs consent from their mortgage company to let their property as a HMO (house in multiple occupation), if there are to be 3 or more non related individuals living in the property. This is very difficult to get on a standard buy to let mortgage, but virtually impossible on a standard home owner mortgage. But if the owner does manage to cross that hurdle then they have to also ensure that the property is set up a fully compliant HMO according to the regulations of the local council. Failure to ensure that the property is up to regulations i.e. correct sized rooms, heating, smoke alarms and emergency lighting, number of bathroom, sinks and cookers, thumb latches on doors etc. could result in heavy fines and rectification orders from the council.  If there is over 5 people and 3 stories of property utilised (loft space or basement for example) then the property may have to be licensed. If this is the case and neither the property manager or the owner has got the property licensed then the fines can be up to £20,000 plus further fines for each case of negligence.

So generally, unless the property is already a HMO, set up and regulated as one, mortgaged as one and licensed if applicable, i would strongly recommend against letting a property manager put in multi occupiers into a property.

So what should you do when an apparent dream opportunity seems to appear on your doorstep, offering you a fixed rent for 3 years or so.

Firstly consider if you have the experience to manage such a contract, then ensure that the “management contract” is correctly drawn up by a knowledgeable solicitor and that the contract ensures that the “property manager is responsible to carry out things like the Gas safety certificate, electrical certificate and any other essential checks or maintenance on the landlords behalf, also that the correct “legal” tenancy agreements are used with the tenant, with you stated as Landlord.

Check up on your Property Manager regularly, you are still responsible for anything that is not done, legally or safety wise, so check up on the Gas and Electrical safety, the number of occupants in your property and the property maintenance being carried out, visit your tenants and inspect your property regularly to make sure. Failure to carry out gas safety certificate, could result in penalties of up to £5000 or 6 months in jail, per offence. If the property is going to be multi let, ensure that your mortgage company are happy with this and that your property is compliant to all current HMO regulations within your district.

ARLA, in conjunction with the RLA Residential Landlords association, surveys Landlords and agents nationwide and in their latest quarterly survey, some surprising results came forward about investing habits across the UK.  The survey showed that the regions with the highest number of landlords buying property across the country during the last 12 months were the North East at 30%,  the Midlands at 26%  and the rest of London at 26%

Traditionally London has led the way in the housing market and the Rental Market in the past, but these results clearly show that investors elsewhere across the country are firmly in the belief that now is the time to buy property again and are jumping in and purchasing properties to rent.

It may be because in the outside of London areas, the returns and yields are much higher and easier to achieve cash flow, with relatively low starting capital or investment hence making the offering much more attractive. The lack of funding available may also be a factor resulting in the need for cheaper properties to be sourced for investment.

Surprisingly only 18% of the landlords in the South West actually state that they bought rental property during the last year, whilst at the same time 10% actually sold property, this being the highest number stated in the UK, showing a clear and interesting trend.

One of the benefits of investing in the midlands and the northern regions is that the cost of the properties in the first instance is substantially lower, this results in landlords being able to buy more properties for the same level of investment. This is actually a great strategy for the purpose of spreading your risk, as it means that if you have a property or tenancy that goes bad, you have more “good” properties to carry the portfolio.

This is demonstrated by the research in that it shows that landlords in the North have bigger property portfolios, with an average 13 properties per landlord in the North East and North West. In comparison, landlords in Central London and the South East own an average 6 rental properties each.

There also appears to be large growth in some areas, more than others. In some cases this is due to the favourable Student markets (in some areas, this is declining) also the large investment in HMO properties nationwide. Houses in Multiple Occupation for professionals and working people have become popular due to the current, and set to increase housing shortage, as well as tenants wanting to be more sure of their outgoings with all inclusive rents.

Some Councils are more in tune to HMO development and conversion leading to regional variations,  some councils have managed to make it extremely difficult for landlords to convert properties to HMO`s by joining up to the Article 4 scheme, requiring all HMO conversions to have planning consent. There has also been the recently unveiled “local Enterprise Zones” targeting regions set for future growth which should aid growth in certain areas.

All of this is positive for the Private Rented Sector or PRS, which is set to increase from its current position of 16% of the total housing stock to 50% by 2050, but needs a boost to take it to the next level. Demand from tenants is still phenomenal and is far outstripping supply and with the possibility of home ownership nothing more than a dream for most youngsters, the PRS needs to increase dramatically to meet those demands.

If larger scale investment is not made into the PRS over the next few years, there could be huge shortage of choice for tenants entering the rental market, also if the demand continues to increase at the current rate, with supply not improving, most towns could see a substantial increase in the rents being charged, as the simple scale of supply and demand is totally out of line currently.

It is also a concern that if the Private Rented Sector becomes a provider of 50% of the nations homes, then regulation will be required and made to insist on consistency of property & trading standards nationwide and to cut out the unscrupulous landlord/agent operator. The positive of this is that it will also help to preserve the good name of many Good ethical landlords and agents that already operate clearly, safely and ethically.

One of the first regulations we will be seeing towards this is the minimum Energy rating for rented property from 2018, which will leave many properties currently on the market to let, un-rentable in the future.

Sally Lawson

31/08/2011

The key to protecting yourself from bad tenants mainly comes down to having the correct referencing procedures in place before the tenancy begins, to deter any would be defaulting tenants from choosing YOUR property! Make it difficult for anybody “hiding” something or pretending to be someone they are not from getting into your house.

Some tenants that fall into rent arrear’s, are genuine cases, but in most situations i have found that the genuine cases will do anything to resolve the matter like rent a smaller property, move in with relatives, make an arrangement to pay or apply for housing benefit pretty quickly to avoid any bad debts. Unfortunately, there are many more that fit into the other category and either default on their rent because “they know how to get away with it”, but there are also many “professional tenants” out there. These are not professional as in professionally employed, but who make a living out of unwitting landlords who make hasty “judgements” and spend months or years regretting it.

To protect yourself from getting a tenant that is going to bleed you dry, you want to build a picture of who they are and what they are about with your investigations before they move in.  Have a strict “application” process to find out, where they work, what they do and how long they have been there, but also find out how much they earn is it part time or full time too. If they have been with their employer for less than a year ask for previous employment references as well, remember never to take a mobile number for an employer, it could be their best friend.

Ask for their National insurance number (in case you have to pursue them for bad debts later) and their next of kin’s details, always very useful if they stop paying or run off!

One of the most useful references you can get from a tenant is a previous landlord reference, the problem with the “current landlords reference” is that you are unlikely to get the truth. Most landlords stuck with a tenant from hell would find it very difficult to give an honest reference to any prospective landlord knowing that doing so means that the tenant would not be able to leave, this is why the “previous” landlord is the one to go to for honesty.

Proof of ID and Proof of identity nowadays is so important too as people will not think twice on impersonating someone else, take a copy of their id (in black and white) and keep it on file, as you may need it later.

Use a good referencing format, either use a credit checking agency and conduct the references yourself or utilise the services of an outside referencing company, but either way get involved yourself and be sure YOU are happy with the results as some referencing companies are not very strict on the criteria and many will not pass on their findings to you, so you end up accepting the tenant with very little information (not much use if you need to pursue them later in court) and on the referencing companies word.

If you do the credit searches yourself make sure that your tenant’s signs to allow you to take references on them and then credit search them, looking for any county court judgements or alias addresses, we always search the alias addresses too. Something else to check out is the voters roll register that comes with the credit search. If they haven’t been registered on the voters roll for an address they are “claiming” to have lived at, then ask for proof of address at that place, like a utility bill or mortgage statement for example.

With the deposit always take a little bit more than 1 month’s rent. The reason for this is if you take only 1 months rent as a deposit, then the tenants seem to just stop paying a month before the end of the contract, and therefore you end up with arrears or no deposit, but merely taking an extra £100 on top generally prevents them from doing that, as then they feel they are jeopardising the £100.

But the real defence if you are at all unsure is the taking of a guarantor but beware! Not anyone should be a guarantor, make sure they are a UK Home Owning guarantor. Guarantors that are in rented accommodation rarely pay up and just move when you start chasing them. Make sure that you take the guarantor through the same referencing as the tenant (we insist on them earning 40 times the monthly rent per annum too) and get proof of them owning their own home, like a mortgage statement for example.

If you follow these procedures and in the event of any problems later are very strict with your arrears chasing, you are unlikely to suffer from the worst of the tenants that are out there.

The average void period – a key indicator of the buoyancy of the rental market – has fallen to its lowest level for eight years as demand for rental property remains high. Compared with the previous quarter the average void period has again fallen from 3.6 weeks to 3.2 weeks.

The average number of new tenancies signed up by agencies across the country has also increased, and the rental levels received over the last 6 months have increased due to the high tenant demand. This is an indicator that the current rental market is extremely strong at the moment with the demands on the private rented sector increasing. (Source – ARLA Review)

The market is seeing unprecedented issues. The house builders are refusing to build due to both the risk of not selling and the lack of funding available. There is also a national shortage of properties for sale due to vendors not taking the risk of putting their propertyon the market, unless they absolutely have to. This results in little choice of property out there for any potential buyers.

Many people that would normally be buying property, for example “first time buyers”, are finding it incredibly difficult to find the deposits necessary to buy property and are therefore themselves turning to the rental market to solve their housing needs. Whilst at the same time Investor landlords that would normally be actively buying property are, in many cases, unable to get mortgages, or release funds for the deposits, due to the strict lending criteria. This is inevitably resulting again in a lack of the nationwide availability of rental properties, for the first time since the last recession in the mid nineties.

In the early nineties the housing crash resulted in many people being forced to rent out their property because they simply couldn’t afford to sell, due to negative equity. Many tenants renting because they couldn’t afford to buy due to the horrific interest rates. This was the kind ofPerfect Storm that created a boom for the lettings industry. When this tide eventually turned, properties started to sell once again, creating a shortage of rental property. So, in 1997, the ARLA panel of lenders created the “buy to let mortgage” and this saved the PRS. All of a sudden a new source of privately rented properties started to flood the market. Investors could, for the first time ever, buy properties without the hassle of acquiring a “business loan” which had always been the process before. Now they could obtain a mortgage on the property based on the rental income. This meant that more properties became available serving the desire for rental property.

Now, what is going to save the market this time? The overburdening restrictions on lending need to be somewhat relaxed in order to stimulate the market. Many investors are using more and more “creative” methods to acquire property, which in many cases could lead to complex  confusion on the property market, and may even lead to heavier legislation, which ultimately would be restrictive to growth.

There are some great deals out there in the property market at the moment, with many vendors willing to take large discounts and, coupled with interest rates being as favourable as they have been for decades, the market could not be better set for many investors to make handsome profits.

As the changing work related skills-gaps and career requirements continues to ebb and flow, along with the possibility of regional unemployment becoming more commonplace, employers’ need more workforce flexibility, forcing people to move to where the work is. Add to this the growing trend for smaller households, creating more need for professional house share type accommodation, as well as difficulty in obtaining mortgages, can only lead to the PRS going from strength to strength. It’s now down to the financial institutions and the government to ensure the wheels are well oiled to facilitate these naturally evolving market trends.

81% of agents across the UK in a recent ARLA survey state that they have more tenants than properties and have a shortage of property stock to meet the growing demand. The demands from tenants are now the highest for a decade and more surprisingly more than double that of the peak of 2007.

This has resulted in the average void period (time that a rental property is vacant) falling, dramatically in an unprecedented level from 4 weeks being the average void period in quarter 4 of 2009 to just over 3 weeks in the third quarter of 2010, that’s nearly a 25% reduction! The lowest levels since surveys on the Private Rental Sector began a decade ago.

The average age of the first time buyer has moved in the last decade by a massive 10 years too, with young people now not buying their first property until in their mid thirties (mid twenties 10 years ago) instead turning to the PRS.

The decline in property stock “for sale” in Estate agency windows is also causing a situation where there is not enough choice for people wanting to move. This has created a new phenomenon of “Generation Rent”. These people are being forced to look for rented accommodation and become “tenants” because they can’t find a property they want to buy and they don’t want to lose the sale they have agreed.

In any business when there is a tilt of the supply and demand for a product this always results in a price correction and this is certainly starting to be the case with Rents, these are rising nationwide and this has resulted in many tenants being unable to find suitable affordable accommodation. Many are now looking to house shares to meet the demand and even couples are looking now to start their life together in this type of accommodation, but this has identified a huge shortage of rooms suitable for “couples”.

The changes in the LHA will also start to increase the demand over the next few years, on the private rented sector as many long term tenants of the council will soon have to re-structure their living arrangements due to changes in their family size and LHA entitlement and will no doubt turn the PRS to fill that gap

All in all, the Private rented Sector is having a Boom time for demand. And the shortage of rental property is being fuelled by the lack of lending products still blighting the keen investor from providing the accommodation most needed.

Unfortunately however the future growth prospects, begs a few very important questions. Are we ready for this level of demand and responsibility? As many more people turn to the Private Rented Sector for their housing solution, we have to ask, is there enough regulation to support it? We keep hearing of unregulated agents, not looking after client funds and landlords being prosecuted because they have not adhered to the Housing safety standards, on the flip side we have the LHA payments still being sent to tenants that do not forward their rent onto the landlord and we continuously hear of tenants flagrantly flaunting the law to remain in landlords properties without any real reason causing huge distress to a small landlord.

The Private rented sector is still a market ran by private individuals in the main with the average landlord owning 5 properties. This means that many landlords are working full time doing something else and therefore are not qualified or skilled landlords in the main. Many turn to agents, that are sometimes, unregulated and themselves un-qualified.

If a landlord is entering the Private Rented Sector a few things you should look for are; choose an agent that is regulated by ARLA, RICS or another regulatory body and has client bonded accounts. Ensure that they have someone qualified to oversee the management of your units. Ask to see references from existing clients and make sure they have enough staff to do the job. As a minimum there should be 1 staff to between 50-75 properties managed on average. With the right due diligence you are entering a booming market that is set to soar over the next decade.

The Property Ombudsman’s Christopher Hamer, is in a growth industry receiving more complaints every year and has seen massive growth this year 2009-2010 alone. The service was originally set up to handle complaints from the property sales industry in 1990, becoming main stream for estate agents in 1998 and opening its doors to lettings agents in 2006. The service is available for both tenants and landlords to complain about agents, and the Ombudsman has the ability to award compensation of up to £25000 in any case if they see fit to do so.

Every  Letting agent that is a member of the NAEA (National Association of Estate Agents) or ARLA (Association of Residential Letting agents) HAS to be also a member of the Housing Property Ombudsman the complaints resolution service for Sales and Letting agents in the UK.

For Landlords this is great news as it means that if you have complained to your agent and your issues are just not being resolved you can take the matter to the Ombudsman and they will adjudicate for you.

In 2010 some of the main areas of complaints that re-appeared time and time again were as follows:

• Holding Deposits taken from tenants; this is an area that seems to create confusion mainly due to lack of clarity as to how the money is to be treated and on what basis it is being taken. For example; is the money refundable, if not on what basis can it be held does the landlord get the money or the letting agent? These are all the questions that should be stated clearly in the terms and conditions of business and the receipt.

• Referencing has always been a contentious issue, but again very misunderstood. In many cases this is outsourced to “referencing companies” but what “due diligence” is the agent doing?  They should tell you the landlord on what basis the tenants have “passed” as well as ensuring that the referencing agency has checked the references properly. In some cases the referencing agency has not done the job properly and the agent has not checked it, resulting in bad tenants moving in

• Prior to move in, negotiations can very often be done by word of mouth leading to things getting omitted, misunderstood or not done properly. This can cause huge upset to both landlords and tenants. These should always be in writing and the tenant should be asked to sign something with the requested negotiations written down. The landlord should also be asked to sign to agree to the negotiations listed, this way there can be no confusions.

• Inspections of properties are a common area for misunderstandings too, many landlords think that this is like having a mini survey done on their property every quarter, but this is not the case, they should really be called “visits” not inspections and are merely a way to look over the property and talk to the tenants, not a full survey and this should be explained to the landlords at the outset.

• Maintenance, or the lack of it, causes many a good tenant to leave and this upsets many a good landlord when they realise that it was down to the fact that the agent had not got round to ringing the landlord about it, or not bothered to chase up a contractor. As agents we have a duty of care to the tenants to get maintenance done and to use “suitably qualified” contractors, we cannot “insist” that landlords do the items of maintenance, but we should certainly advise them of their obligations to do so and not get in the way.

• Finally, the Rent. If you really want to upset a landlord for good, then don’t pay him his rent, and yet this is a really common complaint. Many agents just don’t get the system right here! Client accounting is complex and difficult, you also have security issues here in relying on members of staff to send many 1,000’s pounds from your account daily, and this takes trust. Many Lettings business owners end up trying to “fit in doing the client accounting” around doing the lets and running the business resulting in mistakes and lack of consistency.

Landlords want to know as soon as their tenant falls into arrears and what is being done about it, they also want to know how they will get paid out from their rental guarantee insurance policy too if they have one, so again clarity and clear instructions and terms are required here

So what’s the key to a successful and happy agent-landlord relationship?  Clarity of information, managing client’s expectations and being organised enough to do exactly what you said you were going to do.

If you would like to know more about the Ombudsman visit their website on www.tpos.co.uk.

Once again the Housing minister has refused to implement any kind of regulations into the private rented sector which is a big blow for regulatory Bodies that are campaigning for tighter regulation.

What the regulatory bodies are campaigning for is an equal playing ground amongst agents, as currently there is no requirement for lettings agents or landlords to be in any way qualified or to prove themselves adequate to become a landlord or agent. This means that their professionalism is sometimes questionable and in some cases completely illegal, which is bad for the industry as a whole and unsafe for landlords and tenants that may fall into the trap of an unscrupulous agent.

Currently anyone can set up as a letting agent without any qualifications straight away without any legality preventing them from doing so. Letting agents create legal agreements on behalf of their clients and offer advice to unknowing landlords & tenants without the need for any legal training, which is dangerous. Letting agents also collect money from tenants on behalf of their landlord clients and due to this they can be having millions of pounds every year going through their bank accounts without there being any need for them to run client accounts or have their accounts audited.

Unfortunately the majority of the general public seem unaware of this and assume that if you are running a letting agent then you must know what you are doing and be qualified and that they will be protected somehow if the agent was to go under, but unfortunately this is not the case, which many un-savvy landlords have found out to their peril.

We live in a safe world in the UK we expect the government to protect us, and for there to be laws in place for when things go wrong, and in the Lettings industry this is definitely expected but unfortunately lacking

In our town we had a local letting agent that collected 9 months worth of rent from the tenant and failed to pass this on to the overseas landlord, they also failed to act on a maintenance order from the council that they received on behalf of the landlord, which resulted in the landlord almost being repossessed. She had chosen the agent because they were “close” to the property and she thought therefore that they could “keep an eye on it” also they were 1% cheaper than the local ARLA licensed agent. The landlord could not believe that she was so unprotected and that there was very little she could do about the situation.

On a regular basis we come across agents nationwide that fail to renew gas certificates, these are a legal requirement, and for a landlord to fail to be able to produce a current gas certificate can result in a jail sentence and/or a £5000 fine for the owner, and yet this is very common administrative error amongst unregulated and uneducated agents, and yet landlords will still choose them due to their perceived “low cost”.

Time and time again we are finding agents that fail to get tenancy agreements signed, fail to provide inventories, and some that have huge arrears problems, due to not being switched on to getting their landlords money in on time, all this carries a huge burden of cost to the landlord.

At the moment a buzz word in the industry is “Client Money Protection”, this is where an agent will have a type of bonding insurance to ensure that in the event of them going bust or failing to keep proper client accounts, the landlord and tenant is protected and guaranteed their money back. There are various schemes out there but it would appear that the most robust and inclusive one on the market currently is the NFOPP or ARLA client money protection indemnity cover.

In the absence of the government backing proposals to “Regulate” the lettings industry, we must rely on self regulation and there are a few schemes about. ARLA has operated a self regulated scheme and now has created the “Licensed agent” operation, but this in itself has carried lots of confusion.  Any agent that carries the ARLA “Licensed Agent” logo, you can be assured has Client Money Protection, is suitably qualified to carry out lettings compliantly and they will also be having their Client accounts audited regularly to make sure they haven’t spent clients money too. However if they merely carry the ARLA logo, then you will need to check with them as this may merely mean that someone in their office is qualified. There are also similar schemes available through the RICS and NALS

So the lesson here is; no matter which agent you choose, do your research, ensure they have client money protection, AND are qualified to do what they do, as you are responsible for protecting yourself, until the government are prepared to step in and offer some form of centralised regulation,  things are unlikely to get any better.

Sally Lawson

3/10/2011