Police called in as lettings business collapses

Another police investigation is under way after the collapse of a franchised business in a national lettings chain.

The York and Hull offices of Belvoir have been closed, with liquidators called in by the franchisee.

Yesterday, after questions from Estate Agent Today, Belvoir issued this statement: “Following a routine audit of two of the offices within its 140-plus UK network of franchised letting agents, Belvoir wishes to announce that on March 16, 2010, the franchise agreements with Andrew Graham and ‘Hamlyn Investments Ltd’ which operated the Belvoir Letting offices in York and Hull, were terminated with immediate effect.

“This action was deemed necessary after Belvoir identified several irregularities in the way that these offices were conducting their client accounts and other general office procedures, and Mr Graham’s rejection of Belvoir’s offer to provide specialist support to both offices, via the introduction of a highly trained and experienced manager from the group’s central office. Although Mr Graham initially accepted this offer, he then went on to instruct the Official Receiver to commence liquidation proceedings for both businesses on March 15.

“Following the termination of its franchise agreements, Belvoir secured access to the Hull and York offices and retrieved all client files and keys in order to contact landlords and tenants and advise them of the situation and offer assistance in going forwards. Belvoir also reported the matter to Humberside Police and set up a helpline for the support of any landlords or tenants who require on-going management of their property, via the Belvoir national central office in Grantham.”

Mike Goddard, CEO of Belvoir, said: “As an ethical and reputable franchisor, Belvoir conducts regular and random audits of all its offices, and it is thanks to the thoroughness and effectiveness of our stringent auditing procedures that irregularities are uncovered and dealt with quickly. 

“In this case Belvoir took swift and decisive action to minimise the damage to the consumer and liaise with the National Approved Lettings Scheme (NALS), and I am pleased to report that we have been informed that the normal protection afforded by the NALS Client Money Protection (CMP) facility will apply to any landlords or tenants affected.

“As the matter is currently being investigated by Humberside Police we are unable to provide further details at this time. However, Belvoir offers profound apologies for the inconvenience that the sudden closure of these offices will undoubtedly cause to landlords and tenants. I advise anyone affected to contact the helpline detailed earlier, to ask for further assistance.”

A creditors’ meeting was held this week. One person who attended, a landlord, said they had received a letter on March 15 saying the office was to close. According to the landlord, the letter cited an issue with client money.

Last year, Belvoir admitted to issues with four of its offices ­­– Norwich, St Albans, Bearwood (Birmingham) and Gravesend – where client money might have gone missing.

A spokeswoman for NALS said they were aware that Hull and York Belvoir had gone into administration and said the scheme was working “with the liquidator and interested parties”.

Belvoir founder Mike Goddard is also chairman of the British Franchise Association.

Belvoir is not the only lettings franchise chain to have had problems. Martin & Co has also experienced difficulties, with on-going investigations into client money that has gone missing from some of its businesses. The company has since conducted a full audit sweep, with new procedures in place.

Ian Wiilson, managing director of Martin & Co, said thiis morning:   "Martin & Co broke the story last year about the abuse of deposits, and any operator in this industry who takes steps to clean up its network is to be congratulated.

"We went through a very painful 12 months but we are out the other side and we know we have 176 agents of complete integrity and the public can trust them.

"What remains are two unpalatable truths: the first is that NALS, which puts itself forward as a standards body, did not detect the problems in our network and it looks like it did not detect the problems in Belvoir either. Who is going to regulate the regulator? The second unpalatable truth is that although we closed our Chester office back in July 2009, clients have only just started to receive client money protection insurance pay outs from NALS. We closed Rochdale on  October 1, and to the best of my knowledge no client has received a penny yet from NALS. At Rochdale we took the business over as a company shop and we submitted claims to NALS on behalf of our clients. A client has told me that he was informed by NALS that this documentation was simply thrown away, because NALS insist that every client writes to them individually. Understandably some clients are just going to give up having filled in one claim form already.

"Finally, taking clients' money and deposits and using these to run your business is not fraud. It should be fraud, but in our experience the police and the authorities do not regard it in this light."