Keep your money safe and choose the right agent

The sudden closure of a Yorkshire property agency has sparked renewed calls for compulsory regulation of the industry.

Ayrton Properties, which traded as The Property Showroom in Farsley, Leeds, is now in liquidation after a creditor’s meeting organised by Leonard Curtis Recovery

The firm is thought to have managed around 80 homes, which means any landlords and tenants owed rent or deposits may have to seek recompense through the liquidators.

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The Property Showroom’s website displays both the OFT and Ombudsman logos, but it does not appear to have been a member of a regulatory body such as ARLA (Association of Residential Letting Agents) or NALS National Approved Letting Scheme), meaning that it may not have had client money protection.

The Property Ombudsman Scheme does not offer any financial protection in the event an agent ceases trading. Client Money Protection is only available through regulated members of NALS, ARLA, NAEA, RICS or the Law Society

According to Will Linley, of Yorkshire’s largest independent letting agency, Linley and Simpson, at least half of all agents have no professional accreditation, leaving their clients vulnerable.

“Anybody or any organisation can still set up as a letting agent without any experience or qualifications,” he says.

“If agents or private landlords do not comply with strict laws and regulations, homes can be unsafe putting lives at risk, and client deposit money is not protected as many people are finding out to their cost. Research has shown that as many as one million private renters have fallen victim to scams.”

Will adds that ARLA members must undergo an annual accounts inspection to ensure that tenants’ deposits are ring-fenced from the business account.

“There is an increasing number of cases involving unscrupulous agents absconding with clients’ money, or abusing it by using it for cash flow as a way of keeping them and their businesses afloat. You wouldn’t believe how common the latter is.

“Nobody books a holiday with a travel agent who is not properly accredited and registered but this isn’t always the case in the rental market where the stakes are far higher.”

What many landlords don’t realise is that if a lettings agent absconds or goes into liquidation then the landlord is legally obliged to pay the deposit or bond to the tenant.

“Sadly, not many landlords and tenants know how to differentiate between and a good and bad agent,” says Will.

The UK private rented sector has expanded rapidly, but it remains unregulated after the Government controversially shelved plans to introduce a mandatory licensing scheme.

The Property Ombudsman, Christopher Hamer, who saw a 26 per cent rise in complaints against letting agents last year, is demanding that something is done to protect consumers and support decent operators in the industry.

Mr Hamer has proposed the formation of an industry council to develop and promote overall standards within the lettings industry.

He also called for all the industry bodies to pull together and for the Estate Agents Act to be amended to take account of the lettings sector.

The council, he suggests, would “seek to ensure that consumers understand why they should avoid letting agents who refuse to follow a set of industry standards, such as the TPO Code of Practice, and who do not seek out membership of recognised industry bodies such as ARLA, NALS or RICS”.

Mr Hamer supports the new SAFEagent scheme, pioneered by leading players in the sector, including Linley and Simpson.

The scheme, supported by NALS, is the first step in the industry’s bid to regulate itself. Companies have to meet strict criteria and ensure client money is protected to be accredited as a SAFEagent and to be allowed to display the kitemark of reassurance. “We’re hoping that SAFEAgent will be understood by consumers and as easily recognisable as the ABTA and ATOL kitemarks,” says Will.

In recent months, Linley and Simpson has helped a range of customers hoodwinked by unregulated agents.