Can landlords trust their letting agent?

This article was created for Watchdog Magazine as part of a larger article "tenants take care, landlords beware!"

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“Leaving it to the professionals” is supposed to relieve you of the hassle of property management whilst maximising the return on your investment.

Letting agents should help to weed out any ‘bad tenants’, who mainly target the ‘DIY landlord’ through the small ads, whilst ensuring they have their landlords and tenants best interests in mind.

But is this always the case? There are some sharp practices to watch out for to prevent you being stung by a poor performing or downright sneaky letting agent:

1.) Watch out for hidden fees. Many agents may quote a standard rate for their services but forget to tell you about the ‘extras’. ‘Set-up fees’ at each change of tenant, ‘tenancy renewal fees’ and various ‘admin fees’ can all be hidden away in their terms and conditions small print. Be sure to carefully read the contract before you sign and raise any terms you are unhappy with.

2.) Watch out for ‘markups’. It is illegal for a letting agent to make a ‘secret profit’ but this does not stop many openly adding an ‘admin fee’ or inflating a trade person’s invoice when maintenance is performed on your property. You may wish to occasionally check the going rate for any work undertaken or ask for the original invoices to be supplied when a maintenance charge is made.

3.) You don’t HAVE to renew a tenancy agreement. One specific trick an agent may use is to tell you it is mandatory to renew the tenancy agreement once it expires. In fact, at the end of a fixed term the contract automatically becomes a statutory periodic tenancy (a rolling contract), which actually gives you greater powers to remove a bad tenant quicker. Agents have even been known to tell the landlord “the tenant insists you renew” whilst telling the tenant “the landlord insists you renew”. Result? The letting agent benefits by charging a ‘renewal fee’!

4.) Ask what fees they will charge tenants. As well as charging the landlord, a letting agency will most likely charge your tenants various fees before and during the tenancy. Whilst this may be standard practice (although it is now illegal in Scotland) these fees can vary wildly between

agents. If they are particularly excessive it may even put people off renting your property.

5.) Ensure you know who they are letting into your property. Thorough tenant referencing should always be undertaken and made available to the landlord upon request. Some agents will claim they cannot provide this to you due to the “Data Protection Act”, which is simply untrue; landlords are allowed ALL of the information your agent receives on your behalf. Sadly, it has been known for an agent to perform inadequate referencing or even to pocket any ‘referencing fees’ and not actually undertake the referencing at all!

6.) Ensure the inventory is thorough. A well-prepared inventory, preferably with photographs, should always be created, agreed and signed with the tenants as they move in to your property. Some letting agents are known to overcharge for inventories that contain the bare minimum of information, which will not give you the level of protection you require. You should check the quality of an agent’s inventory before you sign up with them.

7.) Check the deposit is protected. Security deposits must be registered with one of the approved government schemes or you may be forced to pay compensation of three times the deposit amount to the tenants. As the landlord is ultimately responsible for this, get proof that the agent has done this on your behalf or take responsibility for protecting it yourself.

8.) Check your money is safe. Any money held by a letting agent should be in a client bank account, which is ring-fenced from their own business account. Agents have been known to amass large amounts of other people’s money before closing down and disappearing. This leaves the landlord liable to reimburse their tenants security deposit from their own pocket.

9.) Always consider the long term. An agent may appear fantastic initially (when they want you to sign on the dotted line) however their enthusiasm can wane when it comes to the nitty gritty of managing a property. Some agents are slow to respond to maintenance issues, which not only upsets your tenants but also jeopardises the health of your property. You should seek recommendations and reviews, from both landlords and tenants, of an agent’s on-going service. Be sure to ask your own tenants how they have been looked after by your agent.

Don’t be afraid to ask for the following before you sign up with a letting agent:

• A copy of the contract (read it!)

• A list of ALL their fees

• How much they charge tenants

• What tenant referencing they perform and if they provide copies

• An example inventory

• Which deposit protection scheme do they use and where is the deposit held

• Testimonials from landlords and tenants

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If you are looking for an agent that is well-established, professional and communicative in Chichester, then contact us to find out how we can get the best out of your investment property.

E-mail me on clive@crjlettings.co.uk or call 01243 624 599.

Don't forget to visit the links below to view my previous buy-to-let deals and Chichester Property News articles:

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c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP

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