Unfortunately Landlords are increasingly losing money tied up with letting agents they instructed in good faith. There are two main reasons this can happen; firstly if an agency experience business problems and are forced to close – often owing money to Landlords and Tenants alike that can never be paid. The second is the more blatant rogue agents who set up shop only to suddenly close and take all money with them.
There are routes that Landlords can take to regain money owed; such as pursuing lawful debt via the courts; so that even if a company is declared bankrupt , money can still be recouped after bankruptcy has ended. Taking legal advice is always recommended, but these are costly and time consuming routes which do not always guarantee a return of what you are owed.
This is where the real difference lies between regulated and non-regulated agents. Checking the credentials and affiliations of an agent before using them is really the best method to prevent any such situations before they even might happen. Agents, such as ourselves, who are members of the Association of Residential Letting Agents (ARLA) have a bonded insurance policy that covers money missing. This Client Money Protection gives Landlords and Tenants alike a confidence in dealing with us, and enables us to gain public trust as a reliable, safe agent. Saving money on a letting fee and choosing a non-regulated agent may seem like a quick way to cut costs, but you have to ask yourself why they can charge a lower fee in comparison to regulated agents, and what you will get for that money.
Particularly in the case of multiple Landlords; you may have several security deposits currently being held by your non-regulated agent. Should that agent run into financial difficulty and close, those deposits will go with them and it will be the Landlord who will be responsible for reimbursing the tenant. If you own multiple properties, this amount could really start to add up; and would certainly be worth more than the money you saved choosing a non-regulated agent over an ARLA regulated agent.
In one case, a landlord lost £1,236 when her letting agent went into liquidation taking her tenants’ deposit with it. She says she was told by the liquidator that most of the £70,000 owed by the agent was in the form of deposits. Landlords bear the legal responsibility, even though it is letting agents that have spent, lost or vanished with tenants’ deposits.
So Landlords, be aware of rogue agents and make sure you instruct an ARLA regulated agent, such as us! The slight difference in fees will be worth it for the quality of service and peace of mind!