Commons Select Committee misses opportunity to regulate letting agencies
The Commons Select Committee has released its long awaited report on the Private Rental Sector. Finders Keepers, the 2012 Sunday Times Letting Agent of the Year, has been following developments closely, attending hearings and providing its own recommendations. Its response to the findings is as follows:
The CSC recommends that letting agency fees should be transparent, be published and double charging to both landlords and tenants should be banned, as the letting trade body ARLA has been suggesting
Rent increases could be linked to the Retail Price Index or equivalent for annual increases during a long-term tenancy. We do this now and it works well.
Letting agents should be governed by the same regulation as estate agents.
The CSC has recognised that a lack of rented stock is ‘the elephant in the room’ and that more needs to be done to encourage investors into the PRS. This includes dismissing calls for a cap on private rents.
A 5 year mandatory electrical safety test would help remove some of the ambiguity surrounding electrical tests
The CSC called for standards to be raised within the PRS but has not recommended that improvements be made tax deductible. At the moment only like-for-like replacements are deductible but if a landlord chooses to improve the property in any way, these improvements cannot be deducted from the taxable income generated by the property.
The committee also recommended a simpler legal framework including a standardised tenancy agreement. A standardised tenancy agreement sounds good in theory but our worry is that it will be too vague to suit all properties leading to significant problems for tenants and landlords if it fails to account for different scenarios or types of property.
The CSC recommended a Key Fact Sheet to communicate rights and responsibilities to tenants but there are two substantial problems with this. Firstly, the Key Fact Sheet might soon be out of date if the legal framework is simplified and the Housing Health and Safety Rating System replaced. Secondly, we are concerned that a Key Fact Sheet would discourage tenants from reading the entire tenancy agreement.
The CSC has not recommended mandatory qualifications for lettings agents. These qualifications should be a matter of course as agents are dealing with complex laws and handling millions of pounds of other people’s money. Basic industry qualifications such as the NFoPP Technical Award should be required of all letting agents. Foregoing regulation of agents is a missed opportunity – the sector needs professionalising if it is to improve both its service and its image.
Founded in 1972, Finders Keepers is one of Oxfordshire’s leading lettings agents. With eight offices and over 100 members of staff, the company offers a multitude of services to both landlords and tenants. It is dedicated to matching tenants with the perfect property while helping landlords make the most of their investments. The company offers a full property management service in addition to its own interior design and building teams. Finders Keepers lets and manages over 2,400 properties each year and boasts a 98.25% occupancy rate. FKStudent Lettings, its specialist student division, has a portfolio of over 200 properties, 95% of which are already let for the 2013-14 academic year with an average rent of £400-450 per person per calendar month.