New rules for lettings agents ‘ought to be tighter’

A government bid to clampdown on rogue letting agents is welcome but doesn’t go far enough according to some. Sharon Dale reports.
Will LinleyWill Linley
Will Linley

The largely unregulated lettings sector has always had its fair share of rogue agents but the recent rental boom has attracted more of them into the industry.

Horror stories abound about shoddy and unscrupulous practices that have left both landlords and tenants out of pocket and the respectable 
agents have long campaigned 
for legislation.

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It has just arrived as part of the Government’s Enterprise Bill, which will make it mandatory for all agents to become members of an ombudsman scheme. This will give landlords and tenants access to independent redress in the event of a complaint.

Housing minister Mark Prisk says that the private rental market was moving up the Coalition’s list of priorities after years of being overlooked.

“We want to make sure the private rental sector is more professional, more mature,” he says.

The ombudsman scheme should be in place by autumn and while most campaigners say that “something is better than nothing”, many add that it does not go far enough.

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Will Linley, director of Linley & Simpson, which has a network of nine branches across West and North Yorkshire, said it fell short of the long-awaited compulsory regulation that would have brought the sector in line with its estate agency counterparts.

“While it is a step in the right direction, we are rueing the fact that it is also a missed opportunity,” he says.

“Tighter policing is needed as at the moment anyone can set up in business as a letting agent.

“It’s been a long-standing anomaly that letting agents, who routinely handle large sums of money, are not regulated in the same way as their estate agent counterparts who do not handle money at all. This bridges the gap but fails to close it in the way many accredited agents like us had hoped.

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“This plan does not go far enough in deterring some operators from providing unacceptable services and engaging in unlawful practices, behaviour which tarnishes the sector as a whole.

“Quite rightly, regulators have the power to close down estate agents for these kind of breaches but this is still not the case for the rogue operators in the letting sector.”

He added that many reputable agents have voluntarily joined industry accreditation schemes, giving clients peace of mind that their money is safeguarded. However, as many as 40 per cent of agents have not.

“Nobody books a holiday with a travel agent who is not properly accredited and registered – but, as ever-increasing numbers of tenants are finding to their cost, this isn’t always the case in the rental market, where the stakes are far higher,” says Will.

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Linley and Simpson say that since the private rental sector is growing rapidly, the need for regulation even more pressing. There are now 3.84m households privately renting in England, compared with 1.9m in 2001 and the figure is increasing.

Research has shown that tenants and landlords who have fallen foul of rogue operators have mainly been left out of pocket by agents not passing on rent, unfairly handling deposits or failing to protect deposits.

Peter Bolton King, global residential director of the Royal Institution of Chartered Surveyors, says the sector is a “Wild West” of ineptitude and abuse. He advises landlords and tenants to ensure their agent is a member of an accredited scheme such as ARLA, the Association of Residential Letting Agents and deposits were registered with a client money protection scheme.

Luke Gidney, founder of Let-Leeds, says the ombudsman scheme is a very encouraging and positive step in the right direction.

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He says: “There have been some people saying that the ombudsman scheme does not go far enough. But it is far better to have this initiative than to have nothing at all. It is a big step and it takes us closer to full regulation of what has been a completely unregulated industry.

“If it is to be a mandatory scheme that we all have to sign up to then I believe that it can give tenants and landlords a real opportunity to voice their grievances and that will surely mean that letting agents will then have to act appropriately.

“It is not the full regulation that I would like but it is a very useful halfway house. At least now letting agents will all know that tenants and landlords who feel badly treated can go to the ombudsman and look for those agents to be called to account for their actions.”

He adds: “This industry can only function to a decent standard if all letting agents are made to act responsibly. I would like to see a system where people have to pass criminal record and credit rating checks before they can set up as a letting agent, where there are industry-wide standard contracts and where every letting agent is fully audited and has to have separate bank accounts for client revenues.

“We are not there yet. But this new scheme does bring us closer to it and may even prompt further moves to introduce all those conditions.”

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