Due Diligence part 1

For the first part of our series on Due Diligence, we look at what questions you should ask your Letting Agent.

However, you choose yours, albeit a household name, fancy logo or personal recommendation, remember that ignoring red flags because you want to see the good in people or want to short circuit the process will cost you later. Ask those all-important questions now! Ratio of properties/rooms available to people looking

Top 5 local employers Different areas and the tenant types they attract

Rentals in different parts of the city and how these have changed in recent times and what has affected them

Any student/social housing areas and the effect this has on rents/crime/tenant turnaround

Any Article 4 or Selective Licensing areas

How safe is my money?

Letting or property management agents, in England, who hold clients' money, must join a "client money protection scheme". This is important because it means that your money and your tenants' money is always protected!

How do they select good quality tenants?

Agents must:

Hold clients money in an account with a bank or building society authorised by the Financial Conduct Authority.

Get a certificate confirming membership of the scheme and provide it to anyone who asks, free of charge.

Display the certificate in any office where they deal with the public and on their website – there are large fines for non-compliance!

Show me the stats!

Good, local, agents are experts in their field and should have area, tenant type, local employer, rental, and demographic specific information to hand, always and, the readiness of this information, will indicate whether they have their finger on the pulse or not. In addition to questions about their business (how many properties they manage, how many members of staff manage them, their void rate, their level of bad debt and how many full or partial deposits they have had to keep to offset damage caused by tenants or non-payment of rent), be sure to ask them for local information like: 20 One of the most important aspects of renting your property and somewhere that a good quality Agent can really add value, is tenant selection. Tenant selection is an art form and a good quality Letting Agent will have this process nailed! Once you have the science covered (in terms of right to rent, affordability, referencing etc.) then the art and experience comes into play and, a good Agent here, will be worth their weight in gold. Ask your Agent where they advertise to find good quality tenants, how they appraise them, who they speak with, to ascertain their character - this information is priceless and a good and experienced Letting Agent will happily share this information readily with you.

Procedures and policies

Be assured of sound procedures and policies, that all staff members are conversant with. Nothing highlighted this better than the recent Covid pandemic - the fallout of which is still affecting lots of Landlords and Tenants. What policies and procedures do your Letting Agents have and can they name them readily? The procedures are only as good as the people using them, so they should be at their fingertips – make sure you check before it’s too late!

The complexities of compliance?

The growing demands of the private rental sector means that Agents and Landlords are having to comply with more rules and regulations than ever before. This puts pressure on their time, resources, and finances. As a landlord, the "buck" stops with you; you cannot contract out your responsibility.

According to the Residential Landlords Association (RLA), the number of laws governing the private rental sector has increased by 32% since 2010, now with 178 regulations affecting those operating in the rental market.

Penalties for non-compliance are often large, with some attracting prosecution and even a custodial sentence. A good quality Letting Agent should work alongside their landlord, having an excellent grasp on compliance. Helping Landlords stay abreast of up-to-date compliance and ensuring that they safely work within the guidelines, is one of the most important tasks for the modern Letting Agent - make sure that yours understand what this means for you.

What do their inspections cover?

Periodic Inspections are important, yet so many landlords and letting agents are slap-dash and leave things to chance. Inspections should include checks on:

• The condition of the property. • The safety of the tenants. • Adherence to the contract. • That everything works and is in good order? • Any people/animals/infestations/issues at the property of which you were unaware. Also, check the central heating system and the radiators to make sure that they work; check the seals around the bath and the shower (a stitch in time saves nine - water leaks are expensive); check each room and compare it against the inventory, taking fair wear and tear and usage into account; check the white goods to ensure that they all work and are all being looked after correctly; check up in the roof (are there any leaks, infestations, things you wouldn't want to see). We also encourage tenants to be present, wherever practicable, as this is always a great opportunity to touch base with them. www.kpa.co.uk

A quality agent will welcome these questions and recognise that they form part of your due diligence process, as a responsible landlord. It will also set the scene perfectly for your future professional partnership!