Con agencies run with cash
Rogue London letting agents are taking advantage of legal loopholes to disappear with clients' money, industry sources say.
According to Penny Parr-Head, lettings director of estate agency Hamptons International, at least three Central London agents have disappeared with clients' money in the last six months. And not all were fly-by-night set ups. One had operated for three years before taking off.
She likened the present situation in the lettings market to that of the booming housing sales market of the 1980s, when some home buyers and vendors were conned out of their money by unscrupulous and unqualified estate agents.
At a seminar for Singapore Airline pilots, Ms Parr-Head warned that the 'UK letting market is fraught with danger'.
The number of letting agents opening shop had doubled in the past five years, but there was no legislation governing the activities of these firms, she said.
Instead of passing on the rental revenue to the landlords, these agents take it and the tenants' deposit money for themselves then vanish without trace.
Ms Head advised prospective landlords to check an agent's reputation before hiring him and ensuring he was a member of the Royal Institute of Chartered Surveyors (RICS) or had agreed to follow its rules. For extra peace of mind, she suggested investors ask to see a RICS annual audit of the agency's accounts, which would show whether an agency was misappropriating clients' money.
It was better to choose an agency which was involved exclusively in lettings or was not selling the property in question or where its lettings and sales departments operated from separate offices.
Going to the cheapest lettings agent was not always such a good idea, she said. Agencies tended to charge between 8 and 10 per cent of the rental income for finding a tenant. Some smaller agencies may charge lower fees, but could take longer to find a tenant than a bigger agency, she said. A larger agency with a network of offices could promote a property in a variety of areas.