These have completely failed to tackle the core problem of unregulated letting agents, which urgently needs to be addressed if landlords and tenants are to be better protected.
As outlined below, almost two thirds of tenants are unaware that letting agents are not regulated and do not realise the importance of using a self-regulated letting agent.
In the 30 years Leaders has been specialising in letting, there have been countless reforms, schemes, rules and regulations introduced to raise standards in the industry.
The latest of these – a package of reforms aimed to protect people renting a property – has just been announced by Eric Pickles, the Minister for Communities and Local Government.
As a strong proponent of better standards in the industry, Leaders welcomes all measures to protect tenants and landlords. However, the firm’s managing director, Paul Weller, is disappointed that the latest reforms – like those before them – fail to tackle the problem at the heart of the industry.
“The fact is, letting agents – the people entrusted to let and look after rented property – are not regulated,” says Weller. “You can have as many worthwhile laws, regulations, schemes and charters as you like – but if there is no regulation of the people who are supposed to abide by them then only the good agents will do so, whilst the unscrupulous will continue to flout the law whenever they please.
“The solution is simple. All letting agents should be licensed to practise and if they are not it should be illegal for them to operate. Rather than acting after they have broken laws and let people down, as is the case now, they should be prevented from practising in the first place.
“We already have many sensible laws governing letting but, under the current system, anyone can set up as a letting agent with no qualifications, experience or
knowledge of the legalities of letting. It is like stipulating laws for motorists in the interests of road safety and then allowing people to drive without having to prove they are capable or know the rules of the road.
“It should be mandatory for letting agents to be qualified, with a sound knowledge of the laws governing lettings; to abide by an agreed code of conduct; and to have Client Money Protection and Professional Indemnity insurance. Landlords who do not let their properties through a regulated letting agent should be licensed. This is the only effective way to protect the public.”
There are around 4.7 million households in the UK’s private rented sector and complaints about letting agents to The Property Ombudsman (TPO) have more than doubled over the last 5 years. Tenants and landlords are equally vulnerable. “Letting agents are in a position of enormous trust,” explains Weller. “Landlords hand over their greatest asset – a property which may represent their life’s savings or future pension – to their agent to let safely and legally, to take care of and to ensure it is returned in good condition. They also rely on their advice on how to make their investment a success and to protect their interests.
“Tenants trust their letting agent to look after their deposit and return it to them at the end of their tenancy; to protect their rights; and to ensure their rented home is safe and in good condition. A letting agent typically holds thousands of pounds in tenants’ deposits and landlords’ rents. With all these responsibilities – and more people renting and letting every year – how can it be right that letting agents are not regulated?”
As more reforms are introduced to the lettings industry without tackling the core issue of unregulated agents, Weller is concerned that landlords and tenants may become more susceptible. “Many will have faith that the reforms are indeed protecting them, not realising that because agents are not regulated, not all will necessarily comply,” he says.
In a recent survey of more than 5,500 tenants, Leaders found that almost two thirds (63%) were unaware that letting agents are not regulated.
“As it stands, it is up to tenants and landlords to protect themselves, but many are not even aware of the need to do so. The advice, in the absence of regulation, has been to only deal with agents who are members of a self-regulating professional body such as ARLA, RICS or NAEA, who operate to a strict code of conduct. Yet our survey found that just 42% of tenants considered membership of a professional body to be very important when choosing a letting agent. By comparison, 70% said that choice of available properties was very important to them in choosing their letting agent.”
Demand for rented property outstrips supply in many parts of the country and there is fierce competition among tenants. People are therefore snapping up properties that fit their requirements, regardless of who the agent is or whether they are a member of a professional body.
“40% of letting agents are not members of a professional body, so it is clear that the public remains at risk. How many more tenants and landlords must be let down before the Government will regulate an industry that has been crying out for such measures for decades?”
Leaders has more than 80 branches and is the UK’s largest independently owned letting specialist. Established by the co-founder of the Association of Residential Letting Agents in 1983 (ARLA), Leaders provides financial probity and rigorous standards in letting and property management. Membership of ARLA, SAFEagent and The Property Ombudsman gives landlords and tenants complete peace of mind.
Article Courtesy of Leaders