Land­lords be­ware un­reg­u­lated mar­ket

The Peterborough Evening Telegraph - - ET Business - by JOHN KRALEVICH Busi­ness edi­tor

PRI­VATE in­vestors in lo­cal prop­erty need to be­ware fol­low­ing the new govern­ment’s de­ci­sion not to reg­u­late the let­tings mar­ket.

Land­lords who deal with ARLA-li­censed agents need not worry, but for the ma­jor­ity who don’t there needs to be a “wake-up call”, ac­cord­ing to Terry Luck­ing, fran­chise owner of Belvoir Let­tings and an ex­pert in Buy to Let in­vest­ment in Peter­bor­ough.

“The de­ci­sion not to reg­u­late let­tings agents has to be a real cause for con­cern for land­lords,” said Mr Luck­ing.

He in­di­cated two groups of let­tings agen­cies to be­ware of, namely those who are un­reg­u­lated and un­qual­i­fied in­ex­pe­ri­enced busi­ness peo­ple.

Un­reg­u­lated agents are un­likely to have au­dited and pro­tected client ac­counts which is, in Mr Luck­ing’s view, crit­i­cal.

He said: “If the agent does not have client money bond­ing (in­surance) a land­lord will be ex­posed to thou­sands of pounds of po­ten­tial losses. Any money an agent re­ceives from a ten­ant is deemed as be­ing re­ceived by the land­lord even if it hasn’t been paid to the land­lord. This will in­clude rent and the de­posit, eas­ily ex­ceed­ing £1,000 in one month alone.

“All too many land­lords don’t spend any time check­ing the back­ground of whom they are con­sid­er­ing deal­ing with. In­stead, they are more concerned about how much the agent charges.”

What can a land­lord do to pro­tect them­selves? Mr Luck­ing ad­vised all land­lords should only deal with an agent who is li­censed with ARLA (the As­so­ci­a­tion of Res­i­den­tial Let­ting Agents).

He added: “Mem­bers of ARLA have strict op­er­at­ing pro­ce­dures, trained and qual­i­fied staff, plus client ac­count au­dit­ing and client money bond­ing.”

The let­ting mar­ket is get­ting larger and tougher with ex­pec­ta­tions for it to keep grow­ing for many years to come. There are now 3.2 mil­lion pri­vate rented dwellings in the UK against 2.6 mil­lion in 2001, a 23 per cent growth in nine years.

The growth in the let­tings mar­ket has brought about many new let­tings busi­nesses and we should ex­pect more to start up, ac­cord­ing to Mr Luck­ing.

He said; “Some of­fer a re­gional or na­tional ser­vice from one of­fice base; oth­ers of­fer­ing in­cred­i­bly low fees. Is there a catch? Yes. How can a busi­ness based in London man­age a prop­erty in Peter­bor­ough? How will it carry out ten­ant ap­pli­cant as­sess­ments, rou­tine in­spec­tions and late rent vis­its?

“Like any busi­ness, if the in­come doesn’t ex­ceed the costs of op­er­at­ing it will go bust. There have been many let­ting agency fail­ures in the past year and more should be ex­pected. Many of these fail­ures have hit in­di­vid­ual land­lords hard cost­ing them thou­sands of pounds re­in­stat­ing monies their ten­ant has paid the agent, but the agent has failed to pay the land­lord.”

CAUSE FOR CON­CERN: Terry Luck­ing, owner of Belvoir Let­tings, has expressed anx­i­ety over the Govern­ment’s de­ci­sion not to reg­u­late let­tings agents.

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