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Sancho Panza

Agents throwing in the towel because of financial difficulties and other worries

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Property Industry Eye 29/3/17

'March 29, 2017 | Rosalind Renshaw

Agents are quitting the industry because of the state of their own finances and amid concerns over the future.

A Lloyds broker specialising in Professional Indemnity insurance for agents yesterday reported that 20% of policy renewals lapsed in December and January – compared with 0% last year.

Lonsdale Insurance Brokers, which is based in the City and currently has some 2,250 estate and letting agent clients, asked those who had let their policy lapse about their reasons for not renewing.

Oliver Wharmby, PI specialist at Lonsdale, said: “The main one was financial difficulty and therefore they were closing the business, or focusing the business in a different direction where PI is no longer required.”

Referring to issues such as Stamp Duty changes, which have damaged the markets for more expensive properties and for buy-to-let purchases, and the impending ban on letting agent fees, Wharmby said: “Many of our policy holders are expressing concerns about the challenging times ahead.”

However, he warned that agents who have decided to close or sell their business should be aware of  risks that may continue to apply because of historical liability.

To cover that, agents may have to buy run-off cover – the RICS, for example, requires six years’ run-off insurance to cover any claims that may arise from incidents before sale or closure.

Wharmby said that while his firm – which also supplies PI and Client Money Protection insurances through the Property Ombudsman scheme – is seeing an increase in the number of agents closing or selling, “We are still seeing a steady number of new start-up agents who appear to be mainly focused on residential lettings and management”.

He also that insurers are seeing a spike in new claims from the following areas:

  • Failure to lodge tenants’ deposits and issue the accurate prescribed information within the required timeframe.
  • Theft during viewings – particularly noticeable in and around London
  • Bogus buyers
  • Fraud and cyber liability
  • Trading Standards fines (not covered by PI insurance) relating to letting agents’ failure to display their fees
  • Personal injury or ‘slip and trip’ claims

He warned agents never to leave viewers unattended, and to be especially vigilant on open days. He also advised using Google to search individuals early on in the sales and lettings process; and to put basic controls in place, such as regular password updates, to try and prevent cyber crime.

He said: “Challenging market conditions always influences an increase in claims frequency. The reason is that businesses become busier and are under more pressure to perform, with the net result often being that errors are made and claims brought by clients for losses suffered.”

In addition to valid claims, he said: “Challenging market conditions typically contribute to an increase in spurious claims against professional advisers.

“The consumer is better protected than ever before and with legislation constantly evolving, property professionals are finding themselves more and more exposed to negligence claims.

“No Win, No Fee law firms only serve to exacerbate the problem and increase the duration of the claim and the costs incurred.”'

 

 

 

Worth emphasizing this isn't just agents changing broker,it's agents not renewing liability cover.

 

I suspect many are skint.

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I bumped into one of the owner operated EAs in town.

He's a tnuc. Was his dads business. Dad was laid off/retired in 2007 a they must have had a big to their income.

He looked very old + stressed.

I bumped into him in supermarket, hwere he was picking up a sandwich for his tea before heading back to work on 'paperwork'.

Rumours are he's down to a couple of part-timers and doing all the paper work himself.

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On 30/03/2017 at 0:06 PM, hi5lo5 said:

Very intresting, a LA is trying to pass the liability to the LL.

http://www.propertytribes.com/worrying-liability-clause-t-127628996.html

Responding late to this, but there's a later reply from the same poster detailing how professional the LAs are:

Quote

Trouble is, I'm running out of agents in that area (this would be number 5) and these latest guys seem quite a bit more together and professional than most. (Like: the one I spoke to the other week that refuses to publish exact fees, or the one I'm with at the moment who defends her failure to reply to phone calls and emails as "the way I do work" and who considers the tenant paying half rent as being up to date). And if I rejected every agreement with grammatical errors, ambiguities or at least one b.s. clause, I'd probably have completely run out of agents by now.

:D:D

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3 hours ago, shindigger said:

Society is collapsing.

No, the fecal solids are bobbing to the surface where they can be seen as such. 

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11 minutes ago, winkie said:

What about the other income they can rely on.....the BTL income?;)

I vaguey know a couple of 50+ tweedy estate agents. Total sham, mind. They were lucky to survive the 90s downfall.

Anyhow, like all EAs dumb as fck. Theyve gone very heavily into BTL. Talk about carrying too much risk/exposure.

I did tell a mutual frined that they are lcuky as there income has fallen so much, they will not be high rate tax payers.

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Does anybody know how the Realtor thing works in the states?

I gather from movies and TV shows that you need to pass some kind of a test to get a Realtor licence. What are they tested on? Do they do more for the client than EAs here?

Edited by John51

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8 minutes ago, John51 said:

Does anybody know how the Realtor thing works in the states?

I gather from movies and TV shows that you need to pass some kind of a test to get a Realtor licence. What are they tested on? Do they do more for the client than EAs here?

Despite he hype, the States is heavily regulated - you cannot have a sh1t without a regulation.

Hairdressrs, massage therapist, etc - all regulated.

A massive makework scheme for USGOV and a protection for low end jobs.

The eam is not far off signing your name. Some aspiring US realtors fail.

 

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WIth low transaction numbers and the interweb, the whole EA game thats been in play since the 70s + the arrival of mass mortgages may be over.

The EAs that'll sruvive wiill be working from a small office in a cheap bit of tonw. The EA mile in most towns has bee nproppeed up for the last 10 years by ripping of renters. Thats ending.

 

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On 30/03/2017 at 9:56 AM, Sancho Panza said:

 

He warned agents never to leave viewers unattended, and to be especially vigilant on open days. He also advised using Google to search individuals early on in the sales and lettings process; and to put basic controls in place, such as regular password updates, to try and prevent cyber crime.

 

 

When I was selling my Uncles house for probate, the car keys were kept in a desk in the office.

The agent must have left a viewer unattended as those key went missing and the car was stolen. The house was locked up at all other times and there were no signs of forced entry.

 It did me a favour though as the car lease had a while to run and the insurance paid out for the subsequent trashing of the car, a rather nice BMW 6 series.

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29 minutes ago, EnglishinWales said:

Surely a hpc will give them a lot of business as everyone rushes to sell at once. That should turn their fortunes around.

Try telling them that. The majority of EAs 'working' today have barely seen prices reversing.

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On 30/03/2017 at 0:06 PM, hi5lo5 said:

Very intresting, a LA is trying to pass the liability to the LL.

http://www.propertytribes.com/worrying-liability-clause-t-127628996.html

Felt a bit sorry for the LL there, he didn't seem to realise that he'd got himself into a completely dishonest industry full of spivs and conmen, seemed a bit wide-eyed, but have to remember that he has made himself into a mini feudal overlord. Anyway, yes, now it's hitting the fan, they'll all be going for each other's throats, desperately chucking the hot potato around. When the going gets tough, the haves turn on each other with unbelievable ferocity and become filled with this mawkish self-pity, as though nothing bad has ever happened to anyone before and it's all happening now for the first time, to them, pouty sulk pout.

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