First, lets start with some facts: The BBC’s Victoria Derbyshire programme has been talking to prospective tenants who have been asked for payments of hundreds of pounds, non-refundable, just to view properties managed by Flintons in London.
At the same time, major agencies like Countrywide and Foxtons are struggling.
And energy companies, like Spark Energy, which won much of their business by paying letting agents to transfer energy supply to them are going bust, further impacting the revenues of the big letting agents who they partnered with.
Some perspective: Letting Agents struggle to find enough property to let and what they do have, results in so much interest that it is perhaps understandable that some, like Flintons, encourage tenants to self-select by focussing on those with cash available to ‘play their game’. In their defence, they say they never charge for viewings but whatever it is they do, the Competition and Markets Authority says that to "require a deposit from a tenant before they have been given the opportunity to inspect the property or the tenancy agreement" could constitute an "aggressive practice" and be unlawful.
Additionally, with the tight market conditions and the forthcoming ban on letting agents being able to charge tenants fees, even the biggest chains and agencies are struggling. Foxtons have seen their share price fall from £4 to less than 50p in just 4 years whilst Countrywide (who own dozens of brands including Austin & Wyatt, Bairstow Eves, Blundells, Countrywide, Dixons, FindersKeepers, Gascoigne-Pees, Hamptons, Mann, Morris Dibben and Lambert Smith Hampton) have fared even worse, with their share price now down to less than 9p from £1.25 a year ago and a high of nearly £6 less than 4 years ago.
Indeed, there is a strong likelihood that a number of big letting agents including Countrywide may not survive given their decreasing revenues and in Countrywide’s case, its weakening balance sheet.
Add to all of this, Spark Energy who many letting agents switched their tenants to in order to get kickbacks, has ceased trading after failing to pay industry regulator Ofgem £14.4M for their renewables obligation payment.
What You Should Do: If you use a letting agent, do ensure that they belong to one of the industry money protection schemes (such as the ARLA Client Money Protection scheme), do ensure you have copies of the paperwork that the letting agent has prepared and produced on your behalf and check that you know who supplies utilities to each of your properties and whose name they are registered in.
What You Shouldn’t Do: Don’t panic. Letting agents come and go and as long as you follow the recommendations above, you are not at risk