Soundbite: Property Horror Stories Part 3 – Letting Agents & Property Managers

Once again, to set the scene a little, I have a diversified property portfolio spanning four different countries, so I do need to rely on letting agents and property managers to support me. However, now and again you do find a bad apple, as with any industry. Today’s episode highlights a few cases that I have either been involved with directly or have some awareness of indirectly. In the most part, I have had good experiences with the letting agents and property managers that I work with, despite what you are about to hear. That said, I usually follow some deliberate due diligence steps before working with an agent, which has probably helped to contain the issues that I have had as small fires, rather than towering infernos.

Resources mentioned

Property Deal Tips & How to Reach me By Telephone

Free Dom Tokens…might be worth something one day: Dominium referral link

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Transcription of the show

Hello, and welcome to another episode of The Property Voice podcast. My name is Richard Brown and as always, it’s a pleasure to have you join me on the show again today.

We continue with the mini-series on property horror stories, this time focusing on letting agents and property managers.

Once again, to set the scene a little, I have a diversified property portfolio spanning four different countries, so I do need to rely on letting agents and property managers to support me. However, now and again you do find a bad apple, as with any industry. Today’s episode highlights a few cases that I have either been involved with directly or have some awareness of indirectly. In the most part, I have had good experiences with the letting agents and property managers that I work with, despite what you are about to hear. That said, I usually follow some deliberate due diligence steps before working with an agent, which has probably helped to contain the issues that I have had as small fires, rather than towering infernos.

So, some letting agent and property manager horror stories up next then…

Property Chatter

Letting Agents & Property Managers – Surely, they wouldn’t do that…would they?

1. From hard working to potentially overtrading into bankruptcy

I met the owner of an agency at a weekend property event and we struck up a good rapport. He was very hungry and hard-working; characteristics I genuinely admire. However, hungry can sometimes stretch into over-reaching, over-promising and potentially over-expanding too!

Essentially, we agreed to work together on one of my HMOs. All started well and in fact at times I even praised the company publicly for some of their actions. Then, it started to change…

A tenant here was letting me know that there seemed to be a new ‘three strike rule’. This is where it always seemed to take three separate reports of an incident before any action is taken. Reports of faults, repairs, ad-hoc tenant requests and even a pesky mice issue all took on average three or more written reports before they were attended to.

In short, this led to frustration and delay, not to mention, worsening property condition and tenant morale. Finally, the agent unilaterally altered the payment dates of rent transfers to me from ‘within 5 days of collection’ per our mutually agreed and written agreement to ‘within the first 5 days of the month following collection’. I objected to the additional delay in receiving my rental income and they simply called me awkward. I insisted that they stick to our original written agreement but they ignored me. I then lost my rag and served notice.

However, the bigger issues were the ones that I could not see! I had wrongly placed my trust in this agent to follow the correct legal procedures. However, after taking back the property, I discovered some things that truly disturbed me. For example, the EPC was not only out of date but was also (incorrectly) rated at F rather than the new legal minimum of E and yet they were advertising for rooms (which was illegal). Then, I discovered that the last gas safety certificate undertaken was over 2 years ago (which is definitely illegal!). I felt sick when I realised the last point, as clearly that’s a VERY serious issue and one I must clearly shoulder the blame for as well.

There were other issues, such as failing to document a new tenancy agreement at an agreed revised rent (illegal), telling one tenant that the landlord (i.e. me) had insisted on a 10% rent increase…when I was not even aware of the situation (false claim) and discovering that despite advertising membership of Property Mark (formerly ARLA), that they are not and never were members (misrepresentation).

Other issues emerged on closer scrutiny, such as the late filing of their accounts, new company formations with similar names and name changes for older companies in a smoke and mirrors exercise and even a couple of strike off notices at Companies House, which are often early indications of financial difficulty. Red flags were waving very clearly at this point…

I guess some of the most frustrating elements arose after serving notice. They simply refused to hand over the property for two months, despite me offering to pay all their fees for the notice period. The NLA and Property Mark both advised me that this was very sharp practice and unnecessary. They then had the cheek and temerity to threaten ME with legal action for using a photo they had taken of my own property in an ad to let a room that they had had vacant for several months!

It took me a month or two of hard work to stabilise the property, tenancies and compliance issues after taking back the property. It all goes to show that when someone is out building their property empire that Rome may be burning back as they do!

1. Bogus works, undisclosed kickbacks and hidden ‘gotchas’ in the agreement

This next section spans several agencies and property managers over a period of years that I and people that I know have encountered, which suggests that agent problems might be more common than you might think. I have first or second-hand knowledge of the following:

• Works quoted for that were not required, such as re-plastering and an air circulation device installation costing £2,000, instead of simply educating tenants on correct ventilation and providing a £100 dehumidifier!
• Supplier kickbacks and commissions, whether disclosed or undisclosed in the agreement – a 10% to 15% handling fee is nice if you can get it; even nicer if we don’t know about it Your browser does not support the audio element.