Letting Agents Close Owing Landlords and Tenants Cash

Mary what you say is so obvious; why don't good LA volunteer the details as you are suggesting.
I reckon if you started up as a LA you'd have us LL flocking to you!!?
The more I hear about LA the more I am convinced there needs to b some sort of overarching bond scheme; as bit like ATOL so if the LA misbehaves the LL and tenants don't lose out.
A LL would then have to make a choice of using a LA who did subscribe to such a scheme and one who didn't.
I wonder what LL 's would do with their LA if he chose NOT to subscribe to such a scheme.

Paul I think that having an ATOL type of scheme for Letting and Managing Agents is an excellent idea.  It was not until I was speaking to Mark at  Pierce & Co., that I realised that Safe Agent and ARLA only prescribed the way in which their Agents dealt with client monies. I had always imagined that they sent people out to inspect the paperwork of their members to ensure that they were doing it correctly on behalf of Landlords - they don't. While client monies are a very important issue this is just one of the many issues that I help landlords with all the time.  Illegal evictions, unfair terms in AST's, illegal entry, bad service of notices.... are much more common problems and they are caused by Agents who do not know the law/regulations.  I would like to see a regulatory body which ensured that those who set up as Agents have a basic knowledge of the law/regulation and that they are expected to maintain CPD to ensure that they are always up to date - afterall if a person takes my money to do a job on my behalf I want to know that they are competant to do it properly.

I would make a terrible Letting Agent Paul I would not have the patience to argue with Landlords who don't understand the real cost of maintaining rented property. Good Agents have my deepest respect and would have many more clients if the industry was regulated to exclude the bad ones.

Perhaps some insurance underwriter that is already involved in landlord insurance work perhaps similar to RGI might devise a scheme for LA in the event they run off with rent and deposit monies.
As LL we acept the efficacy of RGI on our tenants.
Why not something similar on LA?

My understanding is that ATOL is a bonding scheme and that ARLA provides its members clients with similar levels of protection, not just for deposit protection but also for rents collected.

Mark if this is the case shouldn't these LA be shouting form the rooftops that ALL their clients are protected from ANY losses in the event of the LA doing a runner with deposits and rent monies.
Perhaps ARLA could do a piece representing their facilities.
I reckon a lot of LL would like to know if they were coverd by an ARLA insurance in the event of a LA going criminal.
This would result in LL using only LA who are memmbers of ARLA and can validate that fact to the LL.
Give them a call and advise that a lot of LL are having concerns with these criminal LA.
They may well have solutions which I am, sure LL would like to hear about; paticularly the ones who have been ripped off by LA recently.

ARLA do shout this from the rooftops Paul and so do their members, e.g. National Property Group. Great minds must think alike as I spoke to the ARLA press office this morning to invite them to submit their press releases to our News editor@property118.com. We have a campaign running at the moment to increase our exposure via professional bodies and their memberships and vice versa. We are also offering professional and trade bodies the ability to offer a 60% discount code on Gold Profile upgrades in our Directory to their members.

That is good Mark.
Hopefully LL will take note of this and ONLY use LA that are uptodate members of ARLA.
It would appear that even LL who have been in business some time are unaware of these ARLA circumstances.
I might even be persuaded as to the efficacy of LA if they are covered by ARLA for criminal actions.
It will be interesting  now they will be Gold members that perhaps additional helpful info is imparted by them to your site which will have a beneficial effect on LL knowledge base.

ARLA only offer protection of clients funds and only then while LA's are in membership.  The number of times landlords tell me that their LA was a member of ARLA but that when the LA went OOB they were told that they had not paid to renew their membership that year (they wouldn't if money was short) and therefore ARLA could do nothing.  I am not blaming ARLA for this but if landlords are going to use an LA because their funds are protected they need to know that this will not end when the LA fails to renew membership - in other words membership needs to be compulsory.

The other issue for me is that it is not only when a LA goes OOB or runs away with the deposits and rent that a landlord looses money; landlords loose a lot of money because LA's get things wrong on their behalf and there is no regulation to compensate the landlord for these errors nor is there any complusion for a LA to demonstrate a level of knowledge before going into business.

I have read the majority of these posts and Mary is, as always, hitting the nail on the head.

Is it really the responsibility of ARLA to pursue the LA for "criminal actions". Surely this is the responsibility of the Police and trading standards? ARLA are responsible for compensating those that lose from one of their member agents?

I have written an article here which talks about the issue of regulating the letting agent.

http://www.pierceandco.co.uk/press-room/entry/everything-else/2012/01/11/cook-at-regulation-7.html

We consider ourselves an ethical but most importantly trustworthy agent. I know, they all say that but given we are both from highly regulated backgrounds, comply with ICO (a legal requirement) and are CRB checked to the highest level, I know I am well placed to claim this 🙂

What I am trying to get across, is by being a member of a body, it will never stop anyone from going bust and running off with your money. What will help to stop that from happening, is regular inspections as suggested in the article linked above.

As has been mentioned the police and Trading standards don't seem to think it is any of their responsibility to deal with these criminal LA.
It doesn't seem to matter how well CRB checked etc, etc,; the bottom line seems to be if a LA does a runner; having not paid his ARLA subsription then as tenants and LL you are screwed.
These circumstances are going to severely damage LA's business as LL's start withdrawing from contracts.
This is a crisis of confidence for LA; they are going to have to come up with some sort of insurance arrangement to guarantee monies held by LA
Otherwise LL will desert LA.
It is not as though a LA is necesarily needed.
ANY LL who can self manage may source a tenant  and reference with an RGI policy for a year for £218.00 with NO fees required to be paid by tenants.
I think ARLA membership should be compulsory and that along with that membership should be a compulsory binding scheme to pay out in the event a member LA does a runner with client monies
In fact the moment ARLA does not receive the LA membership monies; Trading standards should be informed to shut down the LA offices from trading.
A bit like EHO shuting down food establishments.