HMO Managing Agents: Always Do Your Due Diligence

We were recently reading an article where a property management firm called Mecca Properties had been fined £21,000 for running a dirty and dangerous HMO.

We were particularly shocked to read about how the Manchester-based firm failed to meet some very basic standards such as:

Fire safety breaches including blocked fire exits and a lack of smoke alarms

Failing to provide a gas safety certificate

Problems during an electrical inspection

General uncleanliness with missing bathroom tiles and a broken kitchen window hidden by a To Let board

Whilst in Manchester and not Medway, we are surprised that a company that calls itself ‘one of the best leading Manchester's real estate agencies' would allow these failings to happen.

We don’t doubt that there is more to the case than the article makes out and perhaps HMO lettings is not an area where they specialise or have the experience that they claim.

Barely a month goes by without an article about how another HMO landlord has fallen foul of the complex legislation (and often basic standards).

For example, in addition to the above, in June an East London Landlord whose property was managed by Thamlet Estates was served a rent repayment order of nearly £9,000 for running an unhygienic and unlicensed HMO. Shockingly, deposits were not protected. They were put into a Thamlet Estates private bank account and not returned! We can barely believe this!

Medway is not exempt from its issues and whilst my previous Freedom of Information Request indicated that no fines were issued during 2019, we know that there are HMOs being improperly managed and putting tenants' lives at risk.

Recently, our team received a phone call about a fire at an HMO in Gillingham that we do not manage. The tenants were being evacuated and no emergency contact details for the agent or landlord were found! It is instances such as this that just serve to highlight the risks involved.

What Due Diligence Should I do?

When looking for a managing agent to take care of your property, because you as the landlord remain liable, we just can’t emphasise enough the importance of appointing a trusted, experienced, and appropriately registered managing agent

The risk of your HMO not being managed properly could be at best an unlimited fine and at worst, loss of life and even time in prison. These things are not worth risking!

So, what things should you be looking out for? We have outlined a few below:

Are they registered with The Property Ombudsman and Property Redress Scheme?

Are they a properly registered company, with a listing on Companies House that matches their property details and no negative company history?

Does a Google search reveal lots of positive reviews from landlords and tenants?

Are they a specialist HMO agent with full knowledge of HMO compliance? What is their background and what training/accreditation have they undergone?

Do they have a professional website that ranks well in the local area?

What do the pictures of the rooms they let reveal about the HMOs they manage?

How long have rooms been on the market and at what rents compared to other properties?

What knowledge and experience does a Google search about the company director(s) reveal about their background in property (specifically HMOs)?

Has anyone involved in the business been disqualified from acting as a director, either currently or in the past?

What is their compliance procedure, and can you see copies of all checks carried out?

What support team do they have in place and is there a 24/7 contact for emergencies?

If you are unsure about any of these, then it is always wise to avoid and choose to work with an agent you are confident will be best placed to look after your investment. Fees do vary between agents; however, it is often best to start with your full compliance check as not basing your decision on this could leave you open to significant risk.

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