Monthly Archives: July 2012

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26Jul 2012

Lettings show Sales how to show a home!

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By Steve Roulstone

My second Blog this week is not my usual subject, but I just cannot miss commenting on two properties that I have visited on the last three weeks, both on behalf of differing Landlords and for differing reasons, but it is the difference between them and the manner in which the Lettings Industry views property as opposed to the Sales Industry as to what is acceptable and what is not that I wish to comment about.

Lettings Viewing.

The first property I have mentioned before in this Blog, it is a house that we have let before, but not before we had gone into long conversations with the Landlord about the standard of the house and what work needed to be done. On being asked to re-visit, I found that the property was worse again, as the outgoing Tenant had removed the stair carpet and left protruding nails and an exposed carpet edge right at the top of the stairs, which was a clear trip hazard for anybody visiting the house, never mind potential Tenants. The outgoing Tenant had also left furniture in rooms, some in a state of disrepair and some just left, but it was not the Landlords property and would not form part of any let and needed to be moved. Finally, the garden which was packed with plants and bushes anyway, seemed to have been untouched throughout the summer months, meaning it now took on the appearance of a jungle, in fact I could only get pictures when taken from an upstairs bedroom window that gave any impression of its appearance.

Not suitable.

The only decision I could come to was to advise the Landlord that the property needed attention before it could be considered suitable for viewings. This was not a Managed property, so we were unable to do anymore until the Landlord had dealt with the stairs carpet, organised the removal of furniture with the outgoing Tenant and done something about the Garden, presumably also with the last Tenant. No matter what was promised, because we were not managing, we would not accept responsibility without knowledge that the work had been completed. We would also not accept a position where the outgoing Tenant could accuse us of damaging furniture they had left. In short, there has to be some semblance of order between the end of one Tenancy and what is done to start the second.

Sales Viewing.

I cannot begin to think of words to describe the second property and what we found. The Landlord wanted our opinion of the property as an investment, a service we will carry out when appointed, to give our experience on what to look for and more likely, look out for. The property was for sale as on behalf of a clearance organisation, following a failed mortgage. Nothing what so ever, had been done to change the house from how it was left by the previous owners, other than to place paper tape on toilets, which did little to hide the worst kind of mess one can imagine in toilets (there were two in the same condition) which was smeared over floors, doors and walls. The furniture in some rooms were caked in I have no idea what, and carpets in two rooms had not been cleaned despite the dried remains of what had clearly been somebody being ill. Despite this, somebody had gone to the trouble of bagging the empty drink cans in plastic bags. I did not count them but there must have been two dozen bags – full!

Not suitable.

I washed my hands when I got back to my office and wished I could wash my shoes and change my clothes. The smell was impossible to describe, but the house was possibly the worst I have ever been asked to view. Despite this, the Sales Agent showed no surprise in our comments of disgust and offered no apology or explanation as to why it had been left in this condition, or worse being offered for sale? Now I know that the buyer will not be expected to live in the house as it is currently being shown, but never the less, it is a health hazard and offers more danger to people looking, in my opinion, than any house I have looked at being offered to the rental market. I was just amazed and have had to comment about the difference. I know the Sales Agents are struggling for business still, but I would have thought that as a general statement, they would at least take some pride in what they are selling. I mean, a Car can be refurbished, but you would never expect a garage to sell one in the state of the house I was shown this week!

23Jul 2012

Current Property News: English Housing Survey points of interest.

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By Steve Roulstone

The figures relating to the latest English Housing Survey have been released for 2010 / 2011. There are several results which are worthy for note and for what they are worth I include my thoughts on these highlight points for the Rental Industry. Each of these are included within the report and you can see for yourself they have been reported on in great depth, but what is not mentioned is the fact that these figures when isolated for our Industry, prove that the rental sector shows no sign what so ever in abating, indeed the pattern is shown as one of upwards growth.

Ten Year high.

And growing! I have stated before that I believe the industry represents a figure approaching 20% of the UK housing stock and these figures confirm the growth shown from the last report as being constant. This 17% figure represents an annual growth of 1.7% which with the same pattern for the last eighteen months would produce a current percentage of 19.55% across England. This does confirm more privately rented properties than the social rented sector as that figure continues to fall. But the most significant figure is the actual number of properties this now represents, as 20% would equal 2.89 million houses, up by 1.45 million in ten years. With 5% growth in the last three years, over 20,000 properties per month have been added to our sector during this same period.

Only lively sector.

That the rental sector is the only area where activity is significant is confirmed by the number of people moving during the period this survey was taken. Out of the whole, private rental sector was responsible for 63% (1.26 million) Confirming just how people are relying upon the Private Rented sector at present, as the means to finding accommodation throughout England.

Unusable stock.

One figure that shouts out at present is the number of houses that remained empty at the time of the survey, 940,000 (nearly 1 million!).  83%, some 780,200 properties were in the private sector.  On the basis of these last two figures, the best way of utilising these properties and using them again for habitation, knowing that a percentage would not be fit for habitation, would be to introduce them to the rental market and an Industry that was better regulated through professional legislation would no doubt attract more interest!

Rented property better than estimated.

The Standard Assessment Procedure (SAP) has been updated during 2009 and the new rating shows Private Rented sector property to be far better than we have been led to believe. There have been several comments in the last twelve months by the Government supporting initiatives to improve the Energy Efficiency of the Private Rental sector, including one that stated Private Rental property was the worst performing sector in the UK.  If this is the case, then these figures show there has been one hell of an increase in quality, as by now it will outperforming Privately owned property!

Shift of emphasis.

Perhaps now the Government will stop introducing so many onerous performance requirements solely for rental properties within the 2018 Green Deal energy performance plans and include moves to encourage ALL privately owned properties, whether they be rented OR owned! There now seems no excuse to target just one sector, and if changes are made, I just wonder if they will be watered down, with the knowledge that the privately owned sector is much harder to corner. I have always felt that the rental sector was targeted because it could be rather than because of any urgent need, as an excellent way of achieving Energy performance figures for to meet Government promised figures!

Healthy statistics.

Yes I know there are statistics more statistics and damn right lies! But these figures do show a continued shift towards renting as a lifestyle choice, as well as the affordable alternative to buying. Otherwise those moving would not be so high in the rental sector, but as an industry, these figures I hope will be used as further ammunition to prove to the current Government, that professional legislation is what is required as the best way forward to breed confidence and higher standards. I equally hope that our professional bodies are ensuring that they are not only requesting legislation, but confirming just how this can be achieved through self Policing within the Industry. I for one live in hope!

20Jul 2012

Current Property News: Lettings Market strong but fluid.

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By Steve Roulstone

Over the last three years the market has been very strong and during the spring there were signs that it was slowing down amongst fears about the Economy and a double dip recession. I commented at the time that the weather was having a huge effect as people stayed put and the last six weeks I believe has confirmed this as the pent up delay has been released, at least as our office is concerned.

Record Numbers.

At most times of the year we are aware of the number of properties being let and actually proceeding at any time, but it has been hard work keeping up with the speed of events that the seeming release of pressure has caused. It would also seem that schools and catchment areas have had a lot to do with the decisions Tenants have been making as they prepare for the next academic year, which has subsequently led to an increase of 33% in the number of houses we would normally expect to let.

Unusual.

This Performance whilst excellent does not yet signify a long term trend even though we are hoping that it does and there is no sign of things slowing just yet, but supply of properties then becomes the next problem as we seek to replace stocks. There is of course a natural trend to this as existing Tenants give notice and the market is thankfully still very active in both areas.

National Trends.

The national housing figures for last year have now been released and these figures will be the subject of one of my blogs next week when I have had the opportunity to digest and understand them, but those that have already commented Nationally are confirming the continued rise as Private Lettings in the UK overtake the Public (Council) Housing stock and approaches 20% of the overall housing market throughout the UK.

Landlord advice.

There has also been a marked increase in the number of Landlords we have discussed the market with as we continue to advice on a whole gambit of property scenarios from flats through family homes up to houses of Multiple Occupation. All of which points to the continued growth in confidence in both the aforementioned economy and the rental market.

Continued learning.

All of this means that we have to keep up to date with the changes in legislation and ensure we refresh ourselves on this intricate market of ours. We do this by openly sharing all manner of daily situations to share knowledge and double check what we advice, bearing in mind our legal responsibility lies first and foremost with our service to our Landlords at all times, whilst ensuring we give the correct duty of care to our Tenants.

Change of tack.

 I do not normally change tack halfway through a topic, but I must take time to mention the open meeting held with the staff of our local paper the Staffordshire Newsletter this week, who went to great lengths to get as many Agents together that could attend to a business development meeting. Firstly it is good to know that the long standing major paper for Stafford is taking their part in the property market so seriously as to not only arrange the get together, but also to provide so many staff so we were able to understand  all aspects of what they provide, but also because of the innovations they are bringing to the advertising market. It just goes to prove that ours is not the only market where people need to be looking ahead at all times!

19Jul 2012

Rental Property Advertising: Energy Performance Certificates to be Shown with Particulars

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By Craig Smith

Just over a year ago I wrote about some changes that were planned with regards to including Energy Performance Certificates as part of the details shown to prospective tenants. Well the changes are now in place and, despite quite a lot of confusion, we finally have the answers to some of the questions that have been asked repeatedly over the last couple of weeks!

New Style EPC’s Now Available.

There is now a new style Energy Performance Certificate which still shows the same details as the ‘old’ ones but just in a different format, a bit like a newer model of a car! Some experts have been worried that any older format certificates would need to be replaced by the newer ones each time a property is re-let, even if the certificate has not yet expired. We can now confirm that this is not the case and that older format certificates are still valid, provided they are not out of date.

Should EPC’s be Available when Marketing?

The certificates should be included with printed details if they are being given to a prospective tenant and indeed available at viewings. They should also be provided to a tenant when they move in to a property whether they request one or not. The other change is that the first page of the document should be visible on any electronic advertising such as websites.

However, they do not need to be provided in window displays (imagine the amount of extra windows agents would need just to show them!) or in printed advertisements, for example newspaper adverts.

Should a New EPC be Obtained for Every Letting?

The short answer to this is no! An EPC that has been carried out for the purpose of letting a property is valid for 10 years and the only time it needs to be renewed before this is if any changes have been made to the property that might affect the rating. For example, having new double glazed windows installed or insulation put in.

Further Advice: Saving Energy in the Home

The certificate gives an estimated amount of how much it would cost to run the home over 1 year, based on assumptions of how long the heating will be turned on etc. This won’t be an exact amount that the occupier could expect to pay but does give some idea of how much they would be looking to pay at the property.

Just this Saturday at a viewing, a gentleman asked to look at the EPC as he wanted to compare the energy rating to his current property. He was going to look at the pro’s and con’s of paying extra rent for a new property compared with how the energy bills would stack up. I have to say, I can still count on one hand how many people have actually asked to look at the certificate in the last 5 years!

 

18Jul 2012

Tenant Advice: Letting Agents not always responsible.

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By Steve Roulstone

Over the last couple of weeks, two incidents have occurred where we as Letting Agents have been held responsible for the effects of us doing our job. The situations were different and in both that occurred, having reviewed what we did as a Company we would have to do the same again should similar circumstances occur. But in both cases the responses we received from Tenants whilst being understandable, we felt were unreasonable when you consider we were doing as we were instructed, or in other words, just doing our job.

 Landlord instruction.

The first concerned a Landlord, who we had in the past dealt with on a Tenant find basis, and after moving a Tenant in to the property, had heard nothing more until we received a phone call asking us if we would find a replacement Tenant as the previous Tenant had now left the house. We knew we needed to inspect the house as we were aware that several improvements were planned even after the last tenant, who was fully aware of the situation, had moved in. Having gained permission to enter we found the house in poor condition, with a garden that had not been touched since the winter and a staircase in a dangerous condition because the carpet had been removed leaving many exposed nails.

Tenant reaction.

We sent a communication to the Landlord, stating we were unable to deal with his property as it was unfit (from the point of view of holding viewings) for purpose. He subsequently sent the same e-mail to his Tenant saying this is what we had said about how she had left the property. This was not the case as we had no instruction to comment as we were not managing the house and knowing what had happened before, had actually advised we fully managed the property to enable us to organise the work for him as he lived many miles away but this did not stop the Tenant calling and complaining about our comments, which resulted in a complicated explanation as to what we were commenting on and that any issues from her tenancy were between her and the Landlord, not us.

Reaction.

The Tenant was angry because what we said had been taken out of context and I do not blame her, but asked to report on a property being ready for letting, we would have to say the same again and it was the Landlord who used our e-mail incorrectly, despite having a disclaimer instructing that the content was for the recipient only. Of course this is too small a case to take action against the Landlord, but it has resulted in a breakdown of trust and a Landlord being dis-instructed.

 Insurance issues.

The second problem was bought about because of the need for a house owner to be temporarily re-housed because of recent flooding, again, a situation that is fraught with difficulties and we, knowing the position the Tenants were in, moved heaven and earth to get them re-housed as quickly as possible. But this did not stop the Insurance Company telling the Tenants that both our charges and Deposit requirements were unreasonable. 

Different Trades.

Now far be it for me to comment on current Insurances rates! But I find it a little disingenuous of them NOT to consider what we were doing for their Tenant (i.e. following their wishes) and to place doubt in the Tenants mind, who, up until this time, had no knowledge of what a Letting agent does, why and how. All this did was produce a feeling from people who had already suffered badly enough because of the poor summer weather that they were being taken advantage of when nothing could be further from the truth!

Charges.

To comment fully on Tenant charges is another Blog all together, but we know that what we charge is far from expensive and we are on the lower side of what is charged in our local market place. But frankly, that is not really what was at question. If the Tenant wanted the property we had available and with the knowledge that Insurance Companies have that charges exist when renting through an agent I am somewhat surprised that they do not make allowance and make people aware as part of the service, and of course accept their customers wishes which means they have to accept our terms and conditions, instead to use the words used by the Insurance Company, they considered that ”both the charges AND the deposit (£100 over a full month’s rent) were unreasonable”.

Unavoidable.

Of course none of this will change no matter how many times this happens and of course we have gone through this many times before and will do so again when people need to be re-housed where Insurance is being triggered, but surely Insurance Companies should be the ones to supply a ‘Rental’ fact sheet not the Letting Agent? Of course when Landlords create problems we do have the choice to take the action we did, but the point of this blog is to show that sometimes, no matter what we do as Letting Agents, we will always appear to Tenants to be acting unreasonably!

13Jul 2012

Property Landlord advice: Why Manage privately if you would not sell privately?

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By Steve Roulstone

As a professional Letting Agent I have always believed that Landlords should use professional Agents to look after their property, these excerpts are from a similar view for Estate Agents and I am repeating them in full to show just how they compare. There are of course many more reasons once a property has been rented for using professionals in their trade, but the reasoning used here in developing a sale cross over very well and I believe make the case better than being adopted specifically for rentals.

Security: Would you normally let a complete stranger wander round your house? A good estate agent will always ensure the correct identity of a prospective buyer prior to viewing.

Credentials: An agent will also establish the ability of the buyer to proceed, following up any chain if necessary. Too many buyers say they are “cash”, only for the seller to discover down the line that the buyer has a property to sell and a mortgage to arrange. Agents are familiar with the many red herrings used by unscrupulous or naive buyers and can quickly sort the panel beaters from the embroiderers.

Viewings: One of the most misunderstood aspects of the sales process is the way in which viewings are conducted. Of course you want to sell your house, but there is a lot of psychology involved here. Anything you say, as a seller, is clearly biased and not based on helping the buyer to understand how your property could fit their needs, because you don’t know the buyer nor do you have any knowledge of their preferences. If anything you could put your foot in it. Many sellers try too hard to sell on a first viewing and distract the buyer with irrelevancies like how the boiler works. A first viewing is simply about the buyer thinking “could I be happy here?” A good agent will explore the property with the buyer’s needs in mind.

Valuation: Vendors are notoriously optimistic when it comes to valuing their property (as are certain agents of course, but that’s another story). The price you paid for your home, the amount you spent on it, the amount you need for your next purchase and the amount you need to cover your commitments are sadly all completely unrelated to the value of your property. In fact, whatever some agents and even surveyors might tell you, even the apparent “evidence” of what has sold nearby can be misleading. Buyers buy by comparison, so your property has to look good in relation to what is currently available for sale. It might appear to be an easy exercise to assess these competing homes, but only an agent knows why these properties have failed to sell. If you simply follow the apparent market then you are likely to end up on the same heap. The most damaging thing would be to allow your property to go stale on the market as it is likely not only to take some time to sell, but will probably end up selling for less than it could have achieved had it been correctly priced from the outset.

In view of the above it is little wonder that there is very little appetite for private sales in the UK especially in view of the relatively small amount of commission British estate agents earn in relation to their counterparts virtually everywhere else on Earth. Whilst there will always be tales of someone who did a great job privately these are certainly the exception to the rule.

My question having read and compared the clauses with our Industry is why the appetite for private rentals IS still so strong? Most problems arise once a Tenancy has started and it is mainly by getting one of the aspects listed wrong in the first place! The problem being that it usually remains undiscovered until later in the Tenancy, when problems arise. Then is the time that Landlords have to deal with the issue professionally and within current legislation and unless they are qualified and I obviously accept that many Landlords are either by design or experience, this is the time that mistakes can be made, but I would venture that there are far more properties under the Management of amateur Landlords than bad Agents! Furthermore, when the Agents are either with a professional body or members of schemes such as TPO then the standard of service must rise dramatically.

P.S The picture with this post is meant to raise a smile, I trust you were able to do just that!

12Jul 2012

Tenancy Issues: Nuisance Neighbours Cause Problems for Tenants

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By Craig Smith

With almost 60 million people living in the UK it is quite fair to assume that not everybody is going to get along and that each person will live their life to their own standards. (Wouldn’t it be a perfect world if this could happen?!) When two different types of people have to live in the same area, this is where problems can arise.

Complaints Concerning Rental Property

The majority of complaints made include noise issues or pets causing a nuisance. A lot of residents don’t realise that it is very difficult for a Landlord or agent to get involved in disputes between neighbours. Yes, there may be a clause in a tenancy agreement which might state that the tenant should not carry out any activities at the property which may cause a disturbance but the Landlord could find it difficult to rely on this to ask a tenant to leave without sufficient evidence.

A lot of disputes can be resolved between the two parties without the need for involving any authorities, a little common sense needs to be used if approaching a difficult neighbour. If a dispute cant be resolved there are other channels that can be explored, including contacting your local council who may be able to give further advice.

Threatening Behaviour

A recent case that has involved our office is where a neighbour has reportedly been abusive and threatening towards a tenant. In instances such as these the local police should be informed so that any abusive behaviour can be logged. Again, a Landlord or agent may still not be able to evict a tenant because of the issue although a sensible Landlord would act quickly in order to keep the property let and in a good standard.

The recent case mentioned above has been ongoing and not just an isolated incident. The Landlords have been doing as much as they possibly can in order to keep a good tenant in place and to resolve the issue but when the Landlord of the problem property is hard to contact, or if they were reluctant to assist with the matter, the tenant could find themselves feeling isolated in the property. The tenant may still be in a fixed term tenancy agreement which would add yet another problem to the dilemma.

The Solution?

Of course, a sympathetic Landlord could let the tenant leave early but this then leaves the Landlord with an empty property which could then be difficult to let knowing the problems with the neighbour! The ideal solution would be for the nuisance neighbour to leave but as this is not something that us or our Landlord can control, we are left with a very awkward situation!

11Jul 2012

Current Property News: London gap in house prices growing.

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By Steve Roulstone

The latest set of figures from the Land Registry House price Index, record prices from May this year and show the average house price split by County and Region across the whole of the Country.  The Headline Statistics concentrate on the average house price in the UK which continues to be disappointing after what was considerable hope that prices were recovering after the winter. But what the figures clearly show and the headline report fails to mention is that when looked at closer the gap between London and the rest of the country is continuing to grow.

London and the South East.

London showed an annual increase of 7.7% and the South East of 1.7% these two areas were (apart from the East) the only areas to show an increase. The stand out figure for me is the size of growth in London compared to the rest of the country and this does clearly show how an average price does not reflect what is still happening outside of the Capital.

Regional.

In the West Midlands for example, where we are based (as far as the collated figures are concerned) we have shown a monthly growth of 2.0% but we still have an annual decrease of 1.2%. This does mirror what we have seen and the level of activity Estate Agents are now reporting and reflects the overall monthly growth of 2%. But a quick glance at the rest of the Country and you can clearly see how many areas are still seeing depressed figures.

What happens in London.

Unlike the popular saying does not stay in London and even from my days in retail more years ago than I wish to remember, does eventually spread to other areas, but having seen the differential close for many years, it does seem that this effect reflects a period of sustained downturn and recession, but it is now so different that there is an argument for the Land Registry to split between London and the South East (or just London) and the rest of the Country.

True feel.

 It would probably be unacceptable from a political viewpoint, because of how bad the rest of the UK fares when considered against London, but it is probably the only way to get a truly balanced picture of what is actually happening outside of the Capitol. I like most who look at these figures on a regular basis do at times scan rather than study and I am sure like most who read them fail at times to see the true picture and for me separation should now be part of the reporting every month.

05Jul 2012

TPO Explained

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By Mike Edwards

What is TPO?

 The Property Ombudsman scheme has been offering a free, independent and impartial dispute resolution service to consumers who are dissatisfied with the service provided by registered firms for more than 20 years. If a dispute is resolved in the consumer’s favour, the Ombudsman can provide redress to place the consumer back in the position they occupied before the complaint arose. Resolutions are designed to achieve a full and final settlement of the dispute and all claims made by either party. Where appropriate, the Ombudsman can make compensatory awards in individual cases up to a maximum of £25,000 for actual and quantifiable loss and / or for aggravation, distress and inconvenience caused by the actions of a registered firm.

 Independence

 Whilst TPO charges registered firms an annual subscription, the Ombudsman reports to the TPO Council, the majority of which is made up of non-industry members. It is the Council who appoints the Ombudsman and sets his Terms of Reference (i.e. how the complaint process operates). The Ombudsman is required to report to the Council on a regular basis.

 The Ombudsman is not a regulator and does not have the authority to take regulatory or legal action against a registered firm. However, registered firms can be referred to the TPO Disciplinary and Standards Committee, appointed by the Council, which has the power to expel firms from the scheme and / or report them to the Office of Fair Trading, which has the power to ban firms from carrying out estate agency business.

 TPO is a member of the British and Irish Ombudsman Association (BIOA).

 Membership

 At June 1, 2012, more than 21,770 offices were registered with TPO. This figure includes 11,749 sales offices and 9,301 lettings offices. TPO estimates that these figures represented 93% of sales agents and 64% of lettings agents operating within the UK.

 Further information

The Ombudsman’s Terms of Reference, the Codes of Practice, Consumer Guides and other documents about the operation of the scheme are available at www.tpos.co.uk, together with previous annual and interim reports, further explanation of governance arrangements and a full list of registered firms.

 

03Jul 2012

Client Money Protection explained and TPO client survey.

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By Mike Edwards

Client Money Protection explained and TPO client survey.

Letting Agents can go bust (I know!) But when they do, it can be amid claims of owing landlords and tenants thousands of pounds, so here’s a quick guide to what Landlords and Tenants should look for to safeguard their money.

Letting agents are not regulated, which means anyone can open and trade as a letting agent without any qualifications or licence. Like any other business, if a letting agent stops trading, landlords and tenants become creditors and risk losing any rents or deposits held by the agent.

To stop this, several industry groups run ‘client money protection’ schemes – sometimes called ‘CMP’. Belonging to a client money protection scheme does not mean a landlord will receive compensation if something goes wrong – the schemes have terms and conditions, like time limits for claims and caps on pay outs, so check the finer points do not exclude your rental business.

The main CMP schemes are:

● National Approved Letting Scheme (NALS)

NALS will pay up to £25,000 for any one claim, with a cap for landlords of three months’ rent. The total top pay out for a single claim is £300,000, while the scheme will only pay £3 million in any one year.

● Association of Residential Letting Agents (ARLA)

ARLA will compensate a landlord up to a limit of £25,000. Landlord claims are limited to three months’ rent. The total payable for a member company is £500,000. In any one year, the scheme has a limit of £3 million.

● Royal Institution of Chartered Surveyors (RICS)

RICS will pay a maximum of £50 000 per letting agents, subject to an overall limit for the scheme of £5.3 million for any one year.

● SafeAgent

SafeAgent is not a CMP scheme, but an umbrella group for letting agents who are members of a CMP scheme. The aim is to promote money protection by displaying a single, recognisable logo that shows any money with a letting agent is safeguarded. Letting agents belonging to client money protection schemes should display a logo of one or more of the schemes listed above on their web sites and letterheads.

Even if you see the logo, still check the CMP scheme web site to make sure membership is valid. Some unscrupulous letting Agents say they are members and use the logo when client money is not protected. Don’t forget that just because the agent was part of a CMP scheme one year does not mean membership is still in force years later – check every year.

TPO canvasses members over CMP

The Property Ombudsman Scheme (TPO) is also aware of the importance of CMP as it is now canvassing member firms over the provision of insurance.

“Whilst membership of TPO requires all residential sales and letting agents to abide by the TPO Codes of Practice, have Professional Indemnity Insurance, and agents holding clients’ money to deposit this money in a separate clients account, it does not currently require residential letting agents to hold CMP,” explains Bill McClintock, chairman of the TPO operating company who is circulating a consultation document to members. “Given that the Code of Practice is generally accepted as the primary standards document in the industry, the omission of such an important aspect needs to be addressed. “This is something the board and the Ombudsman, Christopher Hamer, have been considering for some time and recent incidences of both landlords and tenants suffering financial loss means action on CMP is now imperative. Private residential lettings reportedly make up 17 per cent of the UK housing stock.”

The consultation paper sets out various options and points out that member’s of ARLA, NALS, and RICS are required to have CMP. Some letting and management companies acting as subcontractors also provide CMP on all landlord and tenant funds.

McClintock is asking TPO members which of these options, or an alternative fallback position that all TPO member firms without CMP must disclose in writing and actively flag its absence at the point of instruction or sale of services, they would prefer to see enforced through the TPO Lettings Code of Practice.

 “TPO and its Codes of Practice are part of a consumer protection regime with the firm objective of raising standards in the industry,” adds McClintock. “Whilst TPO cannot force agents to sign up to the Code, firms should see the Codes as enhancing the reputation of the industry and for those that are already members of TPO the addition of a clause requiring CMP will enable them to demonstrate to landlords and tenants that their money is protected.

“TPO is a not-for-profit company and will not itself offer CMP to member firms as a new revenue stream. It is not appropriate for TPO to offer such services but I believe it is appropriate for member firms to have such cover. However, members now have the opportunity to express what they think should be the minimum required standard.”