Paul Shamplina's November Blog

 

I remember the conversation like it was yesterday. It was 2002 and I had been trading for 2 years with Landlord Action.  A landlord called our offices wanting assistance with evicting a bad tenant that a letting agent had placed for him. He also said the agent had stolen his tenant’s deposit and not passed the rent onto him. We carried out debt recovery against the rogue agent.

 

The landlord in this particular case was keen to make his story public and expose the rogue agent in order to warn other landlords and tenants not to deal with him.  I remember speaking to a well-known property journalist at the Evening Standard, Mira Bar-Hillel, about why letting agents didn’t have to belong to a redress scheme like estate agents.  Well, as you know, that became law on 1^st October 2014.  We also talked about why there wasn’t compulsory money protection in place for landlords and tenants… and this we’re still waiting for!

 

During Landlord Action’s 16 years of trading, we have had the misfortune of dealing with a number of rogue letting agents.  The most common scam is taking tenants’ deposits and rent that belongs to landlords and then shutting up shop, with no money protection in place.  Having experienced the devastating effects it can have on the victims, I have always made it my mission to expose this problem.  Unfortunately, a few rogue agents tarnish the vast majority of good agents who offer an excellent lettings and management service.  Yet one bad experience can discourage landlords from using a letting agent in the future, instead opting to go it alone and self-manage, which of course can lead to whole host of new problems!

 

I always try to highlight some of the most common problems when filming episodes for Channel Five’s ‘Nightmare Tenants, Slum Landlords’. I want landlords and tenants to understand where risks have been taken and how certain circumstances could’ve been avoided.

 

In series three (currently being filmed), I’m exposing a rogue agent in East London that we know has fleeced several victims, both landlords and tenants. They even tried to lock me in their office!  

 

In the first series, we exposed Christopher Stanley, a letting agent in Bicester, who owed my landlord client more than £20,000 in rent taken for two properties. The landlord walked up and down Bicester High Street with a sandwich board saying ‘Christopher Stanley Lettings steals rents’, she wanted to warn local people about them. They have subsequently ceased trading and the director has been taken to court by the Chartered Trading Standards Institute. Unfortunately, my client is still owed the money.

 

With more and more cases like these emerging, the Government has carried out a review into how client money protection currently operates in the private rented sector.  It has invited experts from local government and the private rented sector to submit evidence, to determine whether to make it mandatory for lettings and management agents. It is believed that client money protection could become mandatory in 2018.

 

In my opinion, mandatory client money protection is essential for our industry.  As well as promoting best practice, it would help drive out the rogues, as discrepancies in their accounts would see many struggle to pass the audit requirements that client money protection providers impose on their members.

 

As Advisory Member to the Property Redress Scheme (PRS), I suggested they carry out a survey about client money protection with their 5,500 members.

 

For me, the statistics which stood out most were: -

 

Do landlords routinely ask you about your policy and procedure for handling clients’ money?

4% = Yes, 82% = No, 13% = sometimes

 

This is worrying - clearly landlords need to be educated.  It’s up to you as agents to promote client money protection to your landlords and tenants as relates to their money and should offer consumer peace of mind.  This is also a good USP to help promote your fully managed service.

 

Are you a member of a scheme which provides you with client money protection? (i.e. ARLA, NALS RICS)

11% = Yes, 89% S= No.

 

I think it is time to get prepared for client money protection to be compulsory and look to see how it can enhance your business.  Yes, this is of course another cost, but in the long term it is another string to your bow in helping increase landlord instructions.

 

Do you display in your office and on your website, as to whether you are a member of a scheme which provides client money protection?

39% = Yes, 61% = No.

 

I can’t stress enough how important it is for you as agents to display your PRS logo in your office windows and on your website, and of course client money protection if you have it. Landlords and tenants are certainly wising up when it comes to their right to redress and access to client money protection.  Again, you should explain why you belong to a redress scheme and what it does.  This adds value to your business, demonstrates best practice and instils consumer confidence. Beware, Trading Standards offices could fine you up to £5,000 if they investigate your office and find you have failed to advertise that you belong to a redress scheme.

 

I am sure in your experience of being a letting agent you have come across another local agent that has acted underhand in some way; possibly not passing on rents, not protecting tenants’ deposits or offering poor management services to landlords.  Our industry should not tolerate these types of rogues and it is important that our enforcement services clamp down on them.

 

I’ve been instructed by the PRS to investigate the efficiency of Trading Standards within the lettings industry and will report my findings to the industry… so, watch this space.

 

For more information on client money protection please visit www.clientmoneyprotect.co.uk/PropertyAgent or call 0333 321 9414