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Property Square Magazine - November 2007

Highslide JSHELP IT'S ALL GONE WRONG!

This month Gerald Fitz-Gibbon, of Fitz-Gibbon, advises Landlords what to do if a tenancy goes wrong and how to make sure it doesn't...

We've all heard the horror stories about agents that go bust and run off with deposits or managers who don't communicate then mess up the tenancy agreement. Thankfully they are mostly just that - stories. In the real world most landlords have positive experiences in their dealings with agents and that goes a long way to explaining why the market remains buoyant and Buy-to-Let continues to attract both institutional and individual investors alike.

The letting industry is today subject to considerable legislation, rules and regulations governing much of the tasks undertaken daily by agents. Recent introduction of the Tenancy Deposit Scheme further affords protection to both landlords and tenants in the case of a dispute and makes it illegal for any agent (or indeed landlord) to accept and hold deposits unless they are part of an insured or custodial scheme. This minimises the opportunity for the unscrupulous agent or individual to take deposits and abscond.

However landlords should do their research and ensure they use a good agent to prevent all the problems that can cause a tenancy to go wrong: incorrect preparation of a tenancy agreement, incorrect notice periods being served, promises made on behalf of a client that can't be fulfilled, failing to pay overdue rent, arguments over fees, mis-management of the property, installing an obviously bad tenant and the list goes on. These problems are not only time-consuming annoyances but are potentially costly.

USE THE RIGHT AGENT
It matters not whether the agent is a single office independent or a large corporate. Often the smaller independents are owner run and managed, and lack the bureaucracy of the large corporate resulting in speedy remedies if a tenancy does go wrong so don't imagine that a large corporate is better placed to fix a problem. Much however, is down to staff training. Well-trained staff who are confident and competent goes a long way to reducing incidents of negligence. Professional bodies such as ARLA (Association of Residential Letting Agents) and NAEA (National Association of Estate Agents) provide the bulk of training in the letting industry with certification for individuals based on examination and study. Make sure your agent belongs to the professional bodies governing the industry.

By employing an agent who is a member of ARLA or NAEA, you can ensure they are subject to an annual audit of the Client Account. This is a requirement for continued membership of both organisations as is the holding of significant PA (Professional Indemnity) insurance. Furthermore, the NAEA goes further to insist members subscribe to the Independent Estate Agents Ombudsman Scheme.

Recommendation is an excellent way of finding the right agent. However be warned, even the experts can fall foul of a well-intentioned recommendation. Over the past two years I have experienced three - two went into liquidation and one simply disappeared. All owed some three to four months rent on a dozen or so houses each. None were members of a professional organisation, none had PI Insurance, and all had proved themselves to be thoroughly reliable to my associates who made the recommendation.

THE REMEDY
When it does go wrong, the first port of call has to be the agent concerned. Most will recognise their position and provide assistance, not least out of moral obligation but also for financial reasons - most 'problems' have a financial impact on their business.

Agents subscribing to the Ombudsman Scheme are obliged to adhere to the findings of the Ombudsman if a claim is found to be valid. In order to meet any compensation the agent will probably pass the claim to their PI Insurers, most of whom agree to pay Ombudsman awards without delay. Furthermore, ARLA and the NAEA have compliance and disciplinary procedures where member firms can be fined or ultimately expelled for serious transgressions. Both organisations take seriously any complaint against member firms.

Sadly there is never any guarantee against an agent who lets your property to the 'wrong' tenant: the agent who lets a tenant into your property before the initial cheque clears only to find the cheque bounces and the tenant stays put, the agent who fails to take references only to find he then fails to collect any rent, the agent who knows you are returning to your home on 20th July and who realises on the 17th he's forgotten to serve the right notice. Rarely does this happen but if it does it is more likely to happen where the agent invests little in training and does not belong to the professional community.

Useful numbers:
ARLA 0845 3455752
NAEA 01926 496800
Ombudsman for Estate Agents 01722 333306

Gerald Fitz-Gibbon, of Fitz-Gibbon (020 7938 5444) has been successfully sourcing investment properties for Fitz-Gibbon clients for almost twenty years.


Ask the Experts

Q: What tips can you give me as a tenant to help find my ideal home?

A: When viewing a property consider how you might personalise the space with accessories like rugs, cushions, dramatic bedspreads or mood lighting such as up-lighters or lamps.

Don't waste time. Before viewing any properties consider what's most important to you and where you might be willing to compromise. If you are keen cook is there really any point viewing a property with spacious bedrooms and a tiny kitchen?

The secret to finding a suitable home lies largely in your preparation. Although 'budget' and 'location' are important invest a few minutes to define your lifestyle and exactly what sort of property you are looking for - it will pay dividends when you start your search!

Expect to pay a premium for property close to shops and restaurants. You are likely to get more for your money if you expand your search to nearby residential areas.

Susan Fitz-Gibbon, Partner Fitz-Gibbon T: 020 7938 5444