LettingFocus

My last newsletter, which covered how Accidental Landlords are being ripped off by letting agents, generated quite a lot of interest from the press.
So I thought I would highlight another letting agency man trap which is just waiting for the new landlords to fall into.

If you use a letting agent and that agent handles the tenancy deposit for you, you ought to think carefully about what happens to that money.
All deposits taken under an assured shorthold tenancy which started on or after 6th April 2007 in England and Wales must now be protected in one of the various tenancy deposit schemes. For more on this read our article on Tenancy Deposit Schemes
If you use an agent, bear in mind that it is you, the landlord who is ultimately responsible for the deposit regardless of whether you have assigned responsibility for it to a third party like an agent.
This means that it is down to you, the landlord, to ensure that it is protected and the tenant is told where (and in which scheme) it is, within 14 days of receiving the deposit.
Any penalties that result from not protecting it properly are the final responsibility of the landlord.
If the deposit is protected in one of the insurance based tenancy deposit schemes (which do not physically hold the deposits) and your letting agent later goes bust, the insurance based scheme will ultimately look to the landlord to pay the tenant back on theit deposit (assuming that there are no valid deductions for damage, of course.)
Landlords should be under no illusions that the insurance based tenancy deposit schemes are a “client money protection scheme.”
They are most certainly not!

SO HOW CAN A LANDLORD PROTECT THEMSELVES AGAINST THEIR LETTING AGENT GOING BUST OR MISUSING THE DEPOSIT MONEY
Well, for a start, before they use an agent, they should carry out financial checks on that agent because letting agents are not regulated and can hold client money without any form of protection for the consumer.
So, use a letting agent or manager who is a member of RICS or ARLA – they do provide some form of protection for client money.
Other letting agencies may be part of associations that also make it a requirement for members to take out Client Money Proection Insurance cover. If they are, do a check that they are really still members and make occasional checks to make sure the insurance cover is still in place.
Not all agents may be members of a trade association but that doesn't mean they are rogues. If they are not in an association, find out how long they have been in business and ask neighbours what their repuation is like.
And if you are in any doubt, just hold the deposit yourself and make sure it is put into one of the tenancy deposit schemes. The National Landlords Association says that an agent cannot refuse this demand. Also, to be on the safe side, make sure rent payments are paid direct into your own account.
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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property title - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer, property speaker and I run this well known property letting and investment blog
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for anyone looking to buy property for themselves or to let out.
In my work as a consultant I help private individuals with any aspect of buying property or buy to let. What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role, I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2008. This blog is updated once a week.
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