Risk Reduction – Letting and Renting Residential Property

Mon 12 Aug 2013

Both landlords and tenants can be blind to the risks they run when engaging the services of a letting and property management agent or renting residential property, for there is often a failure to understand that there is no mandatory regulation of letting agents operating in the UK.

A growing number of landlords and tenants unfortunately find out the hard way and to their significant cost that all lettings estate agents are not the same. The press is littered with news of letting estate agents that have miss-managed their businesses making off with tenancy deposits and rent receipts.

Three simple steps of due diligence to mitigate financial risk and provide remedy is things go wrong:

1. Tenancy Deposit – Since the 6th April 2007 it has been a legal requirement to secure a tenants property under one of four approved tenancy deposit schemes. These schemes fall into two categories, Custodial and non-custodial, the former whereby the funds are held by the scheme provider and the latter whereby the agent or landlord hold the deposit which is protected by an insurance policy. The agent or landlord is required by law to place the tenancy deposit into an approved scheme within 30 days of the start of the tenancy and notify the tenant as to the details of the scheme used. There is now circumstantial evidence to show that Custodial tenancy deposit schemes, such as that provided by DPS (Deposit Protection Scheme) provide a greater degree of security as the deposit funds are held independently of the agent and or landlord. More information can be viewed here

2. Client Money Protection insurance scheme – There are three recognised associations providing protection covering rent as well as independent complaints redress, NALS (The National Approved Letting Scheme), ARLA (Association of Residential Letting Agents) corporate membership and RICS (Royal Institution of Chartered Surveyors). All three ensure that their members:

• Have current Professional Indemnity Insurance

• Use a designated client account banking facility

• Are part of a Client Money Protection Scheme

• Commit to offer services to landlords and tenants meeting defined standards of service

• Have a written Customer Complaints Procedure which offers independent redress should any complaint from a landlord or tenant not be re-solved in-house

3. Ombudsman Scheme – Whilst it is a legal requirement for all property sales agents to be registered to one of two governing Ombudsman Schemes, TPO’s Lettings (The Ombudsman Scheme – Lettings) and The Property Ombudsman. It currently remains voluntary for a letting and property management agent to join and become regulated.

Paula Cunningham – Co Founder and Director – Living Property Waveney Lettings & Management

Regulated by NALS and The Property Ombudsman Lettings and members of DPS.

Paula Cunningham – Co Founder and Director – Living Property Waveney Lettings & Management, www.livingproperty.co, 12/08/13