There are a number of landlords who receive a sub-standard service from their managing agents. Some have never seen nor signed an agency contract, most would not be able to tell you who their tenants are, rents are often paid infrequently, causing rent arrears and much distress to any landlord. Giving your instruction to the wrong management agency, just because they look good from all angles is not an indication that they know what they are doing in this highly regulated sector. You have to ask the right questions and do your due diligence. Here are my seven most significant points to delve deeper into
1. Who are the people – where possible you want to meet the person/people who will be responsible for managing your property. A voice over the phone or an impressive website is not enough. Are they qualified, and if not do they understand the lettings and management business. I meet so many people who are potentially “qualified” but clueless. ARLA will be introducing a law next year that you will need to have a qualified person in each branch/office at any time. If you are dealing with online agents – do they have an office that you can pop into at any time, without the need to make a prior appointment. The look and feel of the office (papers everywhere is not good equals chaos and sensitive data should be secured) can tell you a bit about their organisation. How they make you feel, their soft skills characteristics all play a part to how well they will manage. Being reasonable, flexible, knowledgeable and with clear communication our good key indicators you should be looking out for.
2. Transparency Start with their agreements are they clear and easy to read? Do they tell you about their service agreement levels? How easy is it to terminate the agreement? When sending you a regular monthly statements and invoices do they account for all costs by attaching all invoices from trade professionals?
Data protection must be taken seriously and used appropriately when referencing. Under Principle 3 of the Data Protection Act 1988 you can inform your subject (the tenant) that you will be passing the information over to a third party (to the landlord). Therefore, the application form, supporting documents and replies of confirmations can be passed to the landlord, providing the potential tenant agrees and is aware what will happen to their data. This way you have complete transparency that what they say they do, they actually do.
3. Comprehensive referencing – get this wrong and your management is heading for disaster. Knowing who is in your property and whether they have the affordability is essential. Allow me to share a little further with you. Basic tenant checks are worthless as there is no basic eviction process. We all have to go through the same legal procedure, when requiring possession of our property – so why would you settle for a basic tenant check? Landlords must familiarise themselves with the process of referencing, whether the agency is doing so in-house or using a third party. No credit check is full proof assurance of someone’s financial ability to pay. It tells you about their financial history and whether at some point they got into trouble with creditors. Anyone can fall into genuine financial hardship. A man (or woman), could get divorced and then find that months later they lose their job and go through a period when they can no longer afford to pay the bills – which could result in some adverse information being registered against this individual. A year later or so, they are back on track. Because of this common life circumstance does this mean they are potentially a bad tenant? The trouble with the PRS it that it has a great herd mentality and whilst I am not saying to anyone that you should take on people with CCJs etc you have to assess your own risk. If insurance companies had a rent guarantee/legal expense product to support this type of potential tenant would landlords shy away? Perhaps it is time that insurance companies wake up and smell the coffee and step out and be different and get a product like this to the market.
Another great myth is affordability in multiples. How ridiculous and whoever thinks this is a great way to assess potential tenants affordability you need to think again. Because there is no industry standard on tenant referencing (yet), a lot of us are lead to believe (herd mentality creeping in yet again) that this is acceptable it is not! It is to insult a landlord’s intelligence to suggest otherwise. Go back to old fashion affordability. Cash flow surplus. As an agency, we complete all tenant referencing in house having two people on the same salary is not acceptance of their affordability. The only true way you can measure this is by initially having obtained all the necessary information on application form and in supporting documents and assessing what is the surplus monthly cash flow left over after all expenditure has been deducted. If a tenant is increasing their rent by an extra £300 a month (London based), but they only have £200 every month between them they clearly may be who they say they are but they do not have the affordability. There are a number of win/win strategies that can be put in place, but are rarely offered and then when things turn sour the outcome is win to the tenant/lose to the landlord. With multiples this type of tenant would have been given the acceptance tick. Likely to result in them being unable to pay in coming months.The only way to satisfy yourself that the checks have been done is if the agency would be prepared to share the data with you by using Principle 3 of the Data Protection Act.
4. Method of Operation What is their management style? What is their procedure when dealing with repairs? As part of the Deregulation Act 2015 you will all need to ensure that any repairs are logged and dealt with by a reasonable response in 14 days or you could find yourself in a position of not being able to use S21 notice. How often are they visiting your property? Do they give you updated interim reports with photos? You want there to be a cleared log of all exchanges with tenants/you/trades in connection with the property. This is why when you pop into an office and can see this is all in place it makes you feel more secured that the agency is covering all bases. These are just a few of the questions you need to ask there are a lot more besides these.
5. Client Money Protection Just because all lettings and management agencies had to join a redress scheme (law since 1st of October 2014) please do not take this that all agencies have CMP. Many do not as it is not a legal requirement and therefore certain redress schemes when applying for membership this is not a problem. However, it is imperative that you see evidence of this being in place and it is valid. It is a vital protection for landlords that if in the event a company goes into liquidation your money is ring fenced. It is best to ask and seek now, than find out later that it had expired and was never renewed!
6. Hungry, but not gluttonous The landlord is to adopt the role of “interviewer” Finding out what motivates the agency (owner(s) and staff) Ascertain when was the last time the agency went the extra mile for a client and did not charge extra. What sort of things do they do outside of their normal remit and why? Sometimes understanding the history of an agency and why they set up can give you valuable insight into their culture. Cut throat sales or Caring Sales? Whilst every business has to survive on making sales, you can still be ethical and do honourable business.
7. Expertise As a landlord you should be able to rely on the expertise of the management agent but some are amateurs, others are very good and then you have the mediocre in between. Any letting agency (or online operation) can market a property on the main portals, open a door with a key and show a prospective tenant your property, this is not what any self-respecting landlords should look at when assessing the services of a good management company. Knowledge by itself is useless, what you require is “applied knowledge” if they have no idea how to apply it to their day to day managements and there is no consistency, fairness, professionalism and transparency in their business, you are associating with the wrong management agency. Renting property for many is a business, for some it is a necessity due to family circumstances/commitments changing. No one wants to lose their investment or home nor face any litigation because of the action or non-action of the management company. Get it right and its great, get it wrong – give notice to end management and move it on to an agent who exhibits these signs.
© Copyright 2015 George Ellis Property Services