London property in distress

With news from accountancy firm Moore Stephens that 153 high street estate agents became insolvent between April 2017 and April 2018 and an estimate that a further 7,000 UK agents show signs of ‘financial distress’, it’s becoming ever more crucial to choose your property agent wisely, and with due diligence. At the time of writing, the UK’s largest estate agency Countrywide were in the process of receiving a £140m emergency cash rescue package, showing that size does not automatically equate to financial stability. Similarly London’s Foxtons experienced its its first ever loss this year of £2.5 million according to their half-year results, after a downward trend in share prices which has lasted a year.

From a buy-to-let landlord or property investor’s perspective, there are a number of factors which should be reviewed prior to instruction. Here’s our guide to choosing a good letting agent:

In April 2018, the Rogue Landlord and Lettings Agent Database went live, allowing authorities and tenants (in London) to access a list of landlords and agents with prosecutions for a range of offences related to the property industry. The database is actually good news for reputable agents as it will often be the first port of call for tenants in their property search.

For landlords, the database represents a great start in the search for a reputable letting agent but what should you look for beyond that?

ARLA Propertymark (the Association of Residential Letting Agents)  or NALS (National Approved Letting Scheme) are both professional, Government-recognised bodies that require a yearly membership subscription from agents. Each demand a uninformed code of conduct and ethics which their members are required to adhere to; an agency that is accredited to these will have professional guarantees for its services and finances which protect landlords and tenants in accordance with UK laws. Benham & Reeves Lettings are founder members of ARLA since 1981.

Professional services that should be covered by a reputable agent are: thorough credit, reference and employment checks on tenants (including their UK residential rights). Providing up-to-date tenancy agreements and thorough inventories before and after each tenancy. Obtaining an up-to-date Energy Performance Certificate (EPC) for the property for each new tenancy, as well as ensuring the safety of the tenants by arranging annual maintenance checks on the gas and electrics by qualified engineers – that includes safety testing all electrical items and smoke alarms.

All soft furnishings should comply with fire safety regulations and a good agent should be able to point a landlord in the direction of reputable furnishing companies who can provide both furnishings and safety certificates.

Beyond that, a good agent should carry out regular inspections of the property to ensure the tenants are taking care of it and to see what general maintenance needs to be done – keeping communal gardens tidy or cleaning out the gutters for example. A good agent will also have a list of certified tradespeople to call on should needs be – a broken boiler or a leaky roof should be dealt with swiftly, without the landlord needing to be disturbed.

The financial services that a reputable lettings agent will provide include the management of deposits, rents and the maintenance ‘float’ for general repairs. By law, the deposit (paid by the tenants to safeguard damage to the property) needs to be registered with a government-approved tenancy scheme but landlords should check that the agents also belong to a Client Money Protection scheme or the Tenancy Deposit Scheme and that all monies are held in a client account rather than the agency’s account. It is a good idea to ask for confirmation that the deposit has been registered and check how the rent, maintenance costs and agency charges are accounted for and how often your account will be credited. A good agent will have clear financial processes and be able to account for the movement of all funds. As professional agents, Benham & Reeves Residential Lettings have been full members of TDS since 2007.

Finally, it’s important to understand something of how the agency operates; has it been established for a long time? What other properties does it have on its books? Are they similar to yours for a rent you are expecting? Do they have appropriate tenants on their books waiting for properties? Are they proactive in finding professional tenants? Landlords will find, time and time again, that reputable, well-established agencies will: find good tenants, ensure they are happy, bring good return on investment, ensure all the paperwork, finances, legal requirements and safety regulations are complied with and they take the day-to-day stress out of managing a property portfolio – and for a landlord, that’s priceless.

Don’t be afraid to test your agent’s local knowledge! They should be well versed with current rents in the area your property is located. It’s not uncommon for lettings negotiators to know all the streets and most popular buildings where they are operating and to happily provide an insider’s guide to the area which is crucial for incoming tenants.  For 60 years we’ve always said that “local knows best” and it has definitely proved useful when matching tenants to rental properties.

If you are considering renting out your property, are looking for a letting agent,  or need advice on managing your property portfolio, please get in touch.