Landlords beware unregulated market
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.