Agents not Securing deposits | Discuss

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Agents not Securing deposits
11/01/2012
12:48 pm
ChristopherBerry
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I have recently had a tenant leave and on requesting the return of the deposit had no response from the agent. The contract stated the agent would retain and secure the deposit.  I have now tracked him down and he has given me a cheque. I believe he did not secure the money as I have heard rumours about his company and would not be surprised if the cheque bounces.

When I mentioned the fact that failing to secure the deposit under the scheme and then not returing the money when requested was fraud, I was told the Police do not view this as fraud.

If anybody else has been in a similar position or has advice I would really appreciate it.

Chris.

11/01/2012
1:07 pm
JaneHowden
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ChristopherBerry said:

I have recently had a tenant leave and on requesting the return of the deposit had no response from the agent. The contract stated the agent would retain and secure the deposit.  I have now tracked him down and he has given me a cheque. I believe he did not secure the money as I have heard rumours about his company and would not be surprised if the cheque bounces.

When I mentioned the fact that failing to secure the deposit under the scheme and then not returing the money when requested was fraud, I was told the Police do not view this as fraud.

If anybody else has been in a similar position or has advice I would really appreciate it.

Chris.

Hello Chris - we had a similar situation - the agent regularly registered the deposit, gave the tenant the documentation then proceeded to cancel the registration! needless to say we found this out too late! The only way forward is to find other people with the same problem as yourself and if you get together you may be able to progress with a prosecution. As you say the police are not interested - on another point, we had an apartment completely cleaned out -Everything went!! and I mean EVERYTHING!!!! The police viewed it as a private contract between the tenant and ourselves and refused point blank to proceed with any enquiries. (Essex)Confused

11/01/2012
7:24 pm
optionlettings.com
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We were contacted recently by a landlord for advice because their monthly rent was always being paid a month late from when it was due by the tenant. The agent had given the impression that it was the tenant who was
consistently late in making the rent payment. After providing us with a letter of authority to act on their behalf, we visited the agent in question to see the ‘complete file’ relating to the tenancy. One of the first questions we
asked was ‘which of the three statutory government schemes had the tenancy deposit had been placed with?’ We knew the answer was ‘No’ because all three schemes DPS, TDS and mydeposits have the facility to check whether the deposit has been safe guarded and for this tenancy it had not. They had even charged the landlord £50.00 for securing the deposit with the DPS (for the DPS its free!). 

What transpired by looking at the documentation was that the tenant was paying their rent diligently on time every month. We originally were looking at ways to evict the tenant by possibly issuing a section 21 notice as
an easier option. As many people will know, you cannot serve a section 21 notice unless the tenants’ deposit has been correctly lodged with one of the three statutory government schemes. Alarm bells started ringing very loudly at this stage with this agent.

Many agents have just one bank account that is used for every aspect of their business. Client money, deposits and rent get mixed in with their entire out goings and all of sudden they get themselves in financial difficulty. Fortunately, the threat of trading standards and getting the police involved was enough pressure on the agent to cough up and pay the deposit into the DPS. We were then instructed by the landlord to take over the management of the property and got the agent to transfer the agent details held by the DPS to us. This rogue agent subsequently went ‘bust’ owing thousands to other landlords that we came across personally whilst
we were pursuing them. They have just re-opened with ‘new’ owners as a new limited company.  

Jane, the deposit schemes should have procedures in place that would prohibit the cancellation of the registration of the deposit without either the landlord / tenants approval. Hopefully, we might get a response from all three schemes on this one!

12/01/2012
3:37 am
PaulBarrett
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This is the main reson why you should never trust a letting agent; sorry nothing personal against optionlettings.com.

It is perfectly possible for a landlord to insist the deposit monies are paid into the LL's bank account with the advice as to the tenant's details.

The LA MUST give you the form indicating whether or not a 3rd party has made ANY contribution towards the deposit.

It MUST be signed by the tenant and the 3rd party if they assisted with the deposit.

How many people know about this!

I didn't until Mary Latham a well  known prodigious,  informative and informative experienced LL of 40 years advised about recently in one of her extensive blogs on property118.com

Every landlord should read that blog and following posts.

mydeposits.co.uk is the ONLY scheme that a landlord can trust as it is the only deposit scheme where the monies are deposited in the LL's own bank account.

So what if it costs £30 per dpc.

I now take £2000.00 as a deposit on my 3 flats each.

That is a lot of money at risk sitting in someone elses account helping their cashflow and not mine.

Which I why I keep the money and ONLY use mydeposits!

As of April 2012 the LL will have 30 days to send the DPC to a tenant and if necessary a 3rd party.

There will then NEVER be the risk of a LA fouling up or running off with the deposit monies.

I am sure ALL LL's are aware that it does not matter WHAT deposit scheme is used; the ultimate redress for a tenant regarding the deposit is the LL!!

So the LL might aswell have the money in his account.

The LL cannot blame a LA who may have run off with the money or gone bankrupt.

I am simply amazed as to how many LL trust a LA to hold deposit monies with all the risk still being held by the LL with all the benefit of those sometimes considerable deposit monies assisting a LA business rather than the LL's business.

Remember after April 2012 if you have NOT protected the deposit and supplied DPC's to appropriate people you cannot use the Section 21 process UNLESS you 1st refund ALL the deposit to the tenant!

So imagine you were going to use deposit monies to pay rent arrears and you trying to evict.

You couldn't.

Would you really want to trust a 3rd party, namely a LA.;  I know I wouldn't

16/01/2012
10:18 am
pierceandco.co.uk
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From Mark of Pierce & Co

Morning peeps and so the debate rumbles on regarding the regulation of letting agents. I would be interested to know if either of the agents mentioned were a member of a membership body?

Like Options Letting, we have separate accounts as mentioned and all our deposits go to the DPS (which by the way is a custodial scheme so we never hold the money). We insist on this because it puts confidence in the LL and shows that, even if we wanted to which we never would, we are not able to syphon the money off.

Like there are rogue agents out there, the same can be said for landlords. It was just 2 weeks ago we took on a landlord who had a tenant in a property already, taken the deposit, not secured it and took their kids on that long awaited holiday. Now that landlord may not have known (they did) about the law surrounding deposits, but they still chose not to secure the deposit. We are now working with that landlord to secure it.

Our business has been built on trust and reputation which grows every day. Some agents may get a little tired of the constant attacks that the agent gets on a daily basis. We see it as a challenge, because both Carole and I are both from heavily regulated backgrounds and given this, we both know the penalties that can be imposed upon us if we do it wrong. We both hold current enhanced CRB checks and our company is also registered with the ICO. Some agents are not, despite it only costing £35 per year!

I constantly speak to professionals in the industry including Mary on a fairly regular basis and I am amazed at how inept some landlords are. It is simply not a case of letting a property and hoping for the best. You need to know what you can and cannot do and if your agent is worth their salt, they will keep you out of the thick brown smelly stuff as best they can. That said it is also encouraging to see Paul Barrett, that you take your responsibilities very seriously and that you attend Mary's lectures because if you are unsure or don't know anything, she is most definitely the one to tell you! Can I suggest that if you ever want a change of career that you set up as a letting agent because a Landlords experience is crucial in this industry :)

PS: We are not a member of any body and have no intention of doing so at this stage. I have my reasons and they are very valid. The main one being that until we are inspected on a yearly basis by a body that regulates us we are not willing to subscribe just to get a logo. Shoot me down in flames if you want, but some readers will know exactly where I am coming from on this.

 

Edited to change the inept line Wink - Sorry Mary and others! Laugh

Mark A Reynolds

Pierce & Co Residential Letting Agents

http://www.pierceandco.co.uk

01296 20 1234

16/01/2012
4:14 pm
Paul Routledge
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Hi all,

Sorry been away for a bit been doing our new insurance products and I am beaten LOL Laugh

 

I agree with Carole & Mark we seem to have lots of associations and professional bodies that seem to just be in it for the money rather than the cause. I hope that's what makes us different and I think that's what makes some agents different they work for their client rather than just a commission.

It still amazes me how many agents don't join us because they are happy with the old ways of referencing or it does not suit their agenda.

We send out at least 5 tenant alerts a day across the country which are only a day old for £1000's telling people of crappy tenants on the move and none of these would come up on a credit report. So how can any agent who is taking new tenants for a landlord in an area where there is a alert out be doing the best for their landlord, simple they are not.

What surprises me is that there is not one other association in this country doing what we do to protect landlords but they all take the money for the logo !! 

16/01/2012
4:27 pm
pierceandco.co.uk
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Paul Routledge said:

Hi all,

Sorry been away for a bit been doing our new insurance products and I am beaten LOL Laugh

 

I agree with Carole & Mark we seem to have lots of associations and professional bodies that seem to just be in it for the money rather than the cause. I hope that's what makes us different and I think that's what makes some agents different they work for their client rather than just a commission.

It still amazes me how many agents don't join us because they are happy with the old ways of referencing or it does not suit their agenda.

We send out at least 5 tenant alerts a day across the country which are only a day old for £1000's telling people of crappy tenants on the move and none of these would come up on a credit report. So how can any agent who is taking new tenants for a landlord in an area where there is a alert out be doing the best for their landlord, simple they are not.

What surprises me is that there is not one other association in this country doing what we do to protect landlords but they all take the money for the logo !! 

Here Here - Wink

To protect our landlords as much as possible is to protect their investments. Would you rent your house out without first meeting the tenant? I suspect the answer is no and without proper and thorough "due diligence" we wouldn't rent your house to them either!

Mark A Reynolds

Pierce & Co Residential Letting Agents

http://www.pierceandco.co.uk

01296 20 1234

17/01/2012
6:53 am
PaulBarrett
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It seems to me that as in most long established industries innovations seem to take some time before they are universally adopted.

This despite the efficacy and practicality of such innovations.

Clearly LRS is one of these innovations.

It still amazes me that the LRS innovation is not being taken up to the extent that one would think it would be.

Is there something that these recaltricant LA know that LRS doesn't.

Which means that the LRS service is not required.

I can't work out what that might be.

It would be very interesting to actually hear from some of these these LA and also LL as to why they think they do not need to use the LRS service?

It maybe that we who use the LRS service and recognise it's obvious benefits perhaps don't know what we are talking about and therefore perhaps these non-LRS users could advise us as to why we are wasting our time using the LRS facilities.

Sometimes one can be too clever by half and it could be that these LA and LL know something more than we do which is why they choose not to use the LRS services.

I personally don't believe this to be the case.........but you never know;  there is always someday going to be someone who knows more than you.

It could be that such persons are the ones who choose NOT to use the social networking model of LRS.

You have to say aswell that those who use LRS are in a considerable minority compared to the remaining amount of LL and LA who DO NOT use LRS services.

So perhaps we are wasting our time with LRS as it sees the majority of the industry seems to be prepared to carry on in the same old way despite the increasing risks that are occurring to LL and LA.

So I await with interest for a LL and LA to destroy the whole philosophy of the LRS ideals.

I don't think that will happen any time soon...............................but you never know!!!!?

22/01/2012
1:42 pm
Rigsby
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PaulBarrett said:

This is the main reson why you should never trust a letting agent; sorry nothing personal against optionlettings.com.

It is perfectly possible for a landlord to insist the deposit monies are paid into the LL's bank account with the advice as to the tenant's details.

END QUOTE

 

If you mean the agent pays the deposit into the LL's Acc any good agent wont do this because the person who was originally handed the deposit could be the person claimed against if deposit not protected correctly.

So if the agent took the cash and the landlord didnt protect when handed over the agent could find themselves in court as a co defendant.

We belong to the TDS but if we do a "let only" we either put the deposit in our other DPS account and transfer into the landlords DPS, send it direct to the landlords DPS account or have the deposit paid by chq in advance in the landlords name (take photo copy) which is then passed on to landlord.

 

22/01/2012
5:27 pm
PaulBarrett
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II   I would not allow any LA acting for me to take any rent or deposit whatsoever

Nor would I allow them to carry out ANY form of reference checks; I would do that.

I would insist the tenant pays the monies either direct to me or into the bank aoount details that would be advised to the tenant.

Once the tenant had signed an electoral roll form and then signed an AST which I would produce at no cost to the tenant then I would issue the DPC.

You can see I don't have much use for a LA.

25/01/2012
10:58 am
Paul Routledge
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Hi Paul,

We are seeing a growing amount of landlords double checking their Agents references on our systems both lifestyle references and with their own Experian accounts.

We recently had a member whose Agent had put forward a tenant to his landlord and the landlord recognised the initials from a tenant alert and upon checking found out the tenant had left his last landlord owing over £4,000 in rent, so double checking and £16 for a credit report probably saved him thousands and of course that's why we say do not use an Agent who is not a pro-active member of our site because they are exposing you to risks you don't need to be exposed to.

I believe a lot of landlords use agents as a buffer and for their knowledge in the letting business and if the Agent is good I am an avid believer in that path, a good Agent with a fair commission and management charge is worth every penny to those who do not wish to be hands on or lack experience in letting property.

Landlords should be aware that every time a Letting Agent turns down a tenant he turns down his commission and that is why the landlord should always double check because when they do it shows the tenant is good or bad, but just as important it will show whether the Agent is doing the best job when referencing for the landlord or turning a blind eye to turn a coin.

25/01/2012
11:14 am
pierceandco.co.uk
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…but just as important it will show whether the Agent is doing the best job when referencing for the landlord or turning a blind eye to turn a coin.

A dangerous game for an agent – one bad review/letter or worse a complaint to the OFT or TS complaint can kill a business very quickly

Mark A Reynolds

Pierce & Co Residential Letting Agents

http://www.pierceandco.co.uk

01296 20 1234

25/01/2012
12:13 pm
Paul Routledge
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Carole Pierce said:

…but just as important it will show whether the Agent is doing the best job when referencing for the landlord or turning a blind eye to turn a coin.

A dangerous game for an agent – one bad review/letter or worse a complaint to the OFT or TS complaint can kill a business very quickly

I agree but some don't learn that quickly. We have 1 agent in Weston Super Mud that had 2 tenants that were on Alerts in the same day approach him for property, he had to turn them down because he knew, that we new, that he knew they were bad and his words were "That's bloody crap that is" and he has never done a search since.

We don't recommend him top our members who ask us for a agent in the area, we give them the nod that they don't go to him because his current method of referencing is writing to the reference's given to him by the applicant tenant ie:  previous landlord Aka mum, employer Aka best mate, credit and id profile "Fingers crossed"Frown

27/01/2012
10:11 pm
Lynne
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Carole Pierce said:

…but just as important it will show whether the Agent is doing the best job when referencing for the landlord or turning a blind eye to turn a coin.

A dangerous game for an agent – one bad review/letter or worse a complaint to the OFT or TS complaint can kill a business very quickly

Our local Trading Standards weren't interested when I reported the agent that we're in process of sacking (for poor management rather than dodgy referencing) - they said that letting is a commercial activity and so we as landlords don't qualify as consumers and so it's not their remit - we should speak to a solicitor instead.

30/01/2012
12:04 pm
mary latham
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Lynne The OFT took a different view with the famous Foxtons case

http://www.oft.gov.uk/news-and.....09/83-09  The case was based on Unfair Terms in Consumer Contracts Regulations 1999 and the contracts in question were those between the Agent and Landlord not those between the Agent and Tenant. The High court also ruled on this case and did not exclude Landlords because we are not "consumers" 

Perhaps you could let the Trading Standards people  have this information and ask them to comment? I would be very interested in the reply especially if it is in writting.

30/01/2012
12:18 pm
pierceandco.co.uk
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and take A look at this as well and ask them to comment on that!

TS are currently looking into an estate agent in my area who failed in their obligations with a but to let landlord – are they in the same category?

Mark A Reynolds

Pierce & Co Residential Letting Agents

http://www.pierceandco.co.uk

01296 20 1234

30/01/2012
1:15 pm
Sharon
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Interesting comments regarding the various trade associations and I tend to agree with them.

Again, as I usually do, I'm coming at this from a different angle. As you all know managing agents are not licenced any more than landlords and letting agents are. Members of ARMA, the trade body for managing agents are bound to abide by the RICS Code when it comes to managing blocks of flats, a code which is approved by the Secretary of State.

However, no one audits managing agents (whether ARMA members or otherwise) to ascertain if they are indeed abiding by the Code. I don't need to tell you how many cases there have been of the Code being completelhy ignored on so many levels. This is why leaseholders end up at the LVT, challenging what should have been done (according to the Code) in the first place.

The function of a trade body is simple: it acts in the interest of its members and only last year, at the ARMA Conference was it finally acknowldege that leaseholders are consumers. Are landlords consumers when they use the services of a letting agent? Of course they are because they are buying their services.

I may have strayed off the subject matter a bit, but the question has to be asked: if belonging to a trade association is the only way to promote good practice, but such bodies only encompass a tiny percentage of the number of landlords in operation, who ARE the members who get the real benefit of them?

30/01/2012
1:50 pm
mary latham
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There is an interesting discussion here http://www.property118.com/ind.....ash/23522/

 

If Landlords spent a little time getting themselves up to speed and then made reading discussions on sites like this part of their daily routine (better than a newspaper in my opinion and it stops me feeling isolated as a landlord) they would be in a better position to appoint a good Agent.  If you don't know your legal obligations as a Landlord how can you be certain that the Agent is covering your back?

30/01/2012
8:06 pm
Lynne
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Thanks Carole & Mary.

I tried arguing that we are the consumer of the agent's so-called service but today they've come back saying, "Sorry this is in the course of trade and you are not consumers in Law. We are as previously advised unable to help."

I've just sent them this email (hopefully the links will work!):

Since I last emailed you I have been told about the Foxtons case from 2009; the issues were different (the agent putting unfair terms in its contract with the landlord) but the case was based on the Unfair Terms in Consumer Contracts Regulations 1999 and the contracts in question were those between the agent and landlord - in other words the High Court and OFT considered the landlord to be a consumer. You can read about the case http://www.oft.gov.uk/news-and.....2009/83-09:
If the letting agent isn’t a member of a governing body, then you can register a complaint with the Office of Fair Trading (OFT) or Trading Standards (TS). They have the authority to close down an agency if they are found to be unfit to carry out estate agency work under the Estate Agents Act 1979 (EAA) regulations.
Regards
 
 
30/01/2012
8:10 pm
Lynne
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Wanted to add this at end of last post but it wouldn't let me add anything more after I'd pasted in the email:

Also got a response today from the agent, to the two emails I've sent in the past few days - it does appear that they may yet get their act together and eventually give us the information we've been asking for for the last two months plus.

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