The importance of due diligence
Once you’ve chosen a letting agent, check the paperwork
Finally, it’s important to find out how the agent intends to work with you, for example, will they be available outside their standard opening hours?
If you have opted for a fully managed service and there are maintenance issues with the property, will they contact you before carrying out expensive repairs? Will you need to provide funds to cover any unexpected repairs? What is their notice period? How will they pay the rent?
Having thoroughly researched the market, decided on the right level of service for your needs and carried out due diligence on your preferred agent, it’s time to sort out the paperwork.
Make sure you have a clear management agreement that specifies and explicitly lays out what the agent has agreed to do for you, when and how they are going to do it.Check the contract carefully and always read the small print before you sign it. In particular, look at the fees and the termination clauses. Keep a copy of all the paperwork, including the agency agreement and any correspondence.Make sure that the letting agent provides you with copies of the signed tenancy agreement, and any other important paperwork. They should also give you copies of receipts or invoices for any work that they organise.
We have seen that there is a lot to consider when choosing a letting agent, and comparing them isn’t always straightforward.
As a busy landlord, it might be tempting to sign up with the first letting agent you come across, rather than investing valuable time trawling through numerous agents. Paul Shamplina cautions against this approach,
“Landlords don’t do enough due diligence on agents, yet this can make the difference between a successful let, or not. A good agent is really worth their weight in gold, and a bad one can lead to a lot of problems in the future.”
One problem that the Property Redress Scheme comes across from time to time is when landlords find themselves in a position where an agent they have been dealing with suddenly stops trading, leaving outstanding debts.
When an agent does not comply with a legally binding decision made by the Property Redress Scheme because they are no longer trading, they are expelled from the scheme.
Suzy Hershman, Head of Dispute Resolution at mydeposits, offers a little known solution to this scenario.
As part of our process, we now advise landlords and tenants in this position to contact Companies House to make sure the company has not already been struck off or applied to be dissolved. We know that doing this as early as possible in our process has meant success for some. Full guides and instructions can be found on the Companies House website.
You can find out more about this process in a comprehensive guide Suzy has written for the Property Redress Scheme here.
Remember, the internet is your friend and a quick search can pay huge dividends in your homework. Look at the agent’s website and see how many properties they are offering, and whether the properties are recent and local to the agent.
Again, the property portals can reveal a lot and it is not unknown for agents to advertise properties from other agents miles away to boost their numbers.
Review sites exist for agents and whilst some can be manipulated and scores misleading, ones like Marks out of Tenancy give a good indication of an agent’s standing with tenants. If an agent looks after your tenant, they will be looking after your interests and a happy tenant is a happy landlord.
A final word on the importance of carrying out due diligence when choosing a letting agent, from Suzy Hershman.
Ultimately, using client money to service what should be a company’s responsibilities, or a director just plain pocketing the cash is a criminal offence. However, it is not always treated as such by the legal system. This is why we strongly advise landlords to undertake a little bit of due diligence before engaging any agent’s services and trusting them with any money.
