Q The term ‘the accidental landlord’ is familiar to us all. We have now seen a new phrase enter the property industry dictionary – ‘the accidental letting agent’.

A Rising demand for rented accommodation over the last 12 months has inevitably led to an increase in the number of letting agents operating in the market. Reflecting the shift in demand from buying to renting, many agents have adjusted their focus accordingly from selling to letting.

The rise of ‘the accidental letting agent’ can, in some cases, be a positive development as I discussed in last month’s issue, with new entrants to the market presenting the opportunity for a fresh perspective and better business models. However, there can also be damaging consequences of this trend. In some cases, landlords and tenants alike are left at the mercy of agents who are unqualified and inexperienced.

 Industry experts have been lobbying for action to eliminate this problem and the Association of Residential Letting Agents (ARLA) has recently introduced a licensing scheme for its UK members. As a consequence member agents must abide by a strict code of practice. This move must surely be a step in the right direction for the industry.

Q What other steps can be taken to protect landlords? A Received wisdom has always been that landlords with little experience in the buy-to-let arena hire letting agents to assist with all the risk, legal and bureaucratic issues associated with the rent of residential properties.


In a similar vein, letting agents should be turning to experts in the field of lettings insurance and risk assessment – a complex process requiring a significant depth of knowledge – to ensure effective due diligence is carried out on behalf of their clients. It is hard to believe that in these increasingly litigious times, some agents are still attempting to carry out DIY tenant referencing and are shouldering the responsibility of mistakes made.

It appears there’s a prevailing belief in some quarters that a credit score on a prospective tenant provides sufficient evidence for them to make a judgement about his or her reliability, integrity and financial dependability. In many cases however, the agent lacks experience in analysing a given individuals data set. A tenants’ listing at a last known address, for example, is simply electoral roll information and further details should ideally be sought on the individual. Following this up can be a time consuming activity but if the services of a skilled provider are employed, the agent, in one fell swoop, transfers labour and liability issues to a third party.

In the current economic climate, and with rising levels of fraud and identity theft, comprehensive tenant references, as opposed to instant credit check reports can be worth their weight in gold. Instant reports give a flavour of prospective tenants, but amongst other things, in depth reports also provide confirmation that they are earning what they say they’re earning and provides a good indication of their job prospects.

Q Are tenant affordability calculations standard across the industry?

A No, affordability calculations can vary and agents need to be mindful of this. In most cases tenant affordability is calculated on a multiple of the monthly rent. In recent times this multiple has averaged around 30 – in other words for a property commanding a rent of £1,000 a month, a tenant would have to earn £30,000 a year. Some agents, or their tenant referencing service providers, will adopt lower thresholds than others however.

It has been known, for example, for a provider to take 100 per cent of a tenant’s Housing Benefit contributions into account, even when it is paid directly to the tenant. Others will adopt a more cautious, and arguably more sensible, approach to Housing Benefit payments and only take a percentage of payments made directly to tenants into consideration. With letting agents’ reputations at stake when accepting or recommending tenants to landlords, prudence must surely be the name of the game. LetSense is a specialist provider of residential lettings insurance and tenant referencing services for letting agents.