Due Diligence

Due Diligence

Landlords and letting agents tend to get a bad press.  Why?

There are certainly downright rogues out there hoping to take advantage and exploit where they can.  The law should deal with them but it doesn't, largely I suspect because tenants feel beholden and hesitate to rock the boat for fear of causing ill feeeling or of having their tenancy ended.  Government, particularly the Scottish Government, seems to have a passion for introducing further statutory measures and then, having done so, fails to enforce them. To our frustration it also fails to recognise good practice where it exists and so perpetuates the perception that landlords and agents aren't to be trusted and need to be forced to operate within a government-devised regulatory regime.

But good practice does exist:  Many agents strive to offer excellent and reliable service and many landlords genuinely care about their tenants' legitimate interests and want them to have a satisfactory renting experience.  Many landlords also voluntarily undergo training through the excellent Landlord Accreditation Scotland and go on to become accredited landlords. That is a badge which tells tenants that those landlords can be trusted to work to best practice standards.  I'm convinced, although not naive enough to close my eyes to the existence of "the rogues", that the vast majority of underperforming landlords are simply unaware of what they need to do and of what the law requires.  

Any business worth it's salt will have a discipline of due diligence. Its directors owe that duty to the shareholders.  Landlords choosing an agent, and tenants looking for a property, would be wise to do likewise.

So, tenants, you've found your ideal new home and are desperate to secure it.  Stand back a bit and consider:  What are the management arrangements?  Does the landlord manage it directly, or is there an agent?  If the former, does he/she understand the business they're in?  Renting is no longer about providing a roof for the needy - it's about fulfilling a market need in a highly competitive market and responsible landlords will understand that and equip themselves for the job. If an agent is managing, check to ensure that the agent is one you'll be happy with.

Questions to ask:

  • Is the landlord accredited or the agent regulated?
  • If an agent is managing, what is their track record like? 
  • How long did former tenants stay?
  • Why did they leave?
  • What is the procedure for dealing with repairs?
  • Who will do the repairs - the landlord, a friend of the landlord, or a tradesman?  (The key thing here is that the repairer needs to be competent for the job in hand.)
  • What if you have a justifiable need to complain.  How are complaints dealt with?
  • Would the landlord be happy for you to speak to former tenants before committing?

A responsible landlord will welcome those questions and if you are rebuffed that should sound warning bells.

When suitable properties are in short supply and you are desperate to secure the one you've seen it can be difficult or simply impractical take this approach, and it's much easier when supply and demand are in balance.  You do need to make sure that you will be happy with what you're signing up to however.  Check and double check what anyone with a vested interest in getting you to sign says.  Don't accept statements without digging deeper.  That's due diligence. 

 

Landlords. You've decided you don't want the hassle and so you'll use a letting agent. How do you decide?  There are so many out there.  Where do you start?

The first thing to be aware of is that lettings management is completely unregulated.  Anyone can set up as a letting agent whenever they choose regardless of ability, knowledge or credentials.  So you do need to probe a bit.  As with the advice to tenants, carry out due diligence. Don't accept at face value what you read or are told.  Ask, ask and ask again, from different sources if possible. 

  • What letting accreditations does the agent have?
  • What experience in lettings management does the agent have?
  • What is the agent's track record on rent collection?
  • Does the agent do accompanied check-ins?
  • Does the agent undertake mid tenancy visits?
  • Does the agent have professional indemnity insurance?
  • Does the agent have client money protection?
  • If you have cause for complaint does the agent have a complaints handling policy backed by access to an Ombudsmen service?
  • How often has the agent had to take a tenant to court?
  • Has the agent been sued by a client?
  • What's the agent's average void period?
  • Can you speak to one or two of the agent's clients to take their opinion?

 

Take a look also around the agent's office:  

Do the staff seem proactive and experienced?

Can you meet the staff member who will manage your property?  Have a chat with them. Do you feel confident that they will serve you well?  Ask a few questions which will require a considered response and weigh up that response.  Are you confident that that individual will look after your interests well?

 

Do some research;

"Google" the agent. What comes up?

How long do properties stay on the agents's website?

Why not even pretend to be a prospective tenant interested in one of the properties the agent is advertising.  Phone and ask about it. How does the response seem to you?  Would you be happy with that style for your property?

If all landlords did even some of that, underperforming agents would fade away and the bad press with them ..... and government might come to feel it could give up requiring responsible agents to jump through ever more beaurocratic hoops which, unenforced, add no real value at all to anyone.