RESIDENTIALlettings
Ask the expert...
The accidental landlord
asks resident
expert Brian Turney if there is a
problem of inexperience in
lettings risk management
Q The term ‘the accidental landlord’ is familiar to us experience in analysing a given individuals data set.
all. We have now seen a new phrase enter the property A tenants’ listing at a last known address, for example, is simply
industry dictionary – ‘the accidental letting agent’. electoral roll information and further details should ideally be
A Rising demand for rented accommodation over the last 12 sought on the individual. Following this up can be a time
months has inevitably led to an increase in the number of letting consuming activity but if the services of a skilled provider are
agents operating in the market. Reflecting the shift in demand employed, the agent, in one fell swoop, transfers labour and liability
from buying to renting, many agents have adjusted their focus issues to a third party. In the current economic climate, and with
accordingly from selling to letting. The rise of ‘the accidental letting rising levels of fraud and identity theft, comprehensive tenant
agent’ can, in some cases, be a positive development as I discussed references, as opposed to instant credit check reports can be worth
in last month’s issue, with new entrants to the market presenting their weight in gold. Instant reports give a flavour of prospective
the opportunity for a fresh perspective and better business models. tenants, but amongst other things, in depth reports also provide
However, there can also be damaging consequences of this confirmation that they are earning what they say they’re earning
trend. In some cases, landlords and tenants alike are left at the and provides a good indication of their job prospects.
mercy of agents who are
unqualified and inexperienced. Q Are tenant affordability
Industry experts have been
With lettings agents’
calculations standard
lobbying for action to eliminate across the industry?
this problem and the
reputations at stake
A No, affordability calculations
Association of Residential can vary and agents need to be
Letting Agents (ARLA) has
when accepting or
mindful of this. In most cases
recently introduced a licensing tenant affordability is calculated
scheme for its UK members. As
recommending tenants
on a multiple of the monthly
a consequence member agents rent. In recent times this
must abide by a strict code of
to landlords, prudence is
multiple has averaged around 30
practice. This move must surely – in other words for a property
be a step in the right direction
the name of the game.’
commanding a rent of £1,000 a
for the industry. month, a tenant would have to
earn £30,000 a year.
Q What other steps can be taken to protect landlords? Some agents, or their tenant referencing service providers, will
A Received wisdom has always been that landlords with little adopt lower thresholds than others however. It has been known,
experience in the buy-to-let arena hire letting agents to assist with for example, for a provider to take 100 per cent of a tenant’s
all the risk, legal and bureaucratic issues associated with the rent of Housing Benefit contributions into account, even when it is paid
residential properties. directly to the tenant. Others will adopt a more cautious, and
In a similar vein, letting agents should be turning to experts in arguably more sensible, approach to Housing Benefit payments
the field of lettings insurance and risk assessment – a complex and only take a percentage of payments made directly to tenants
process requiring a significant depth of knowledge – to ensure into consideration. With letting agents’ reputations at stake when
effective due diligence is carried out on behalf of their clients. accepting or recommending tenants to landlords, prudence must
It is hard to believe that in these increasingly litigious times, surely be the name of the game.
some agents are still attempting to carry out DIY tenant
referencing and are shouldering the responsibility of mistakes LetSense is a specialist provider of residential lettings insurance and
made. It appears there’s a prevailing belief in some quarters that a tenant referencing services for letting agents.
credit score on a prospective tenant provides sufficient evidence
for them to make a judgement about his or her reliability, integrity
www.propertydrum.com/articles/expertjune
and financial dependability. In many cases however, the agent lacks
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56 JUNE 2009 PROPERTYdrum
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