MPs have urged that letting agents should be subject to tighter regulation saying ‘cowboy agents’ rip off landlords and tenants with Communities and Local Government Committee chairman Clive Betts MP citing problems including unreasonable fees and opaque charges.
A report by the Communities and Local Government Committee notes that letting agents are subject to less control than estate agents and suggests they should be subject to the same level of regulation as estate agents, allowing the Office of Fair Trading (OFT) to ban those guilty of abuses. This is the strongest call yet for regulation and this current government or its successor will find it hard to avoid implementing the committee’s proposals.
The proposals for a new code of practice, if adopted, would make both Client Money Protection and Professional Indemnity insurances a mandatory requirement for all letting agents. The report also urges that both sales and letting agents should at some point be required to register with an accredited industry body. A similar hint is dropped that all landlords could also be made to join a recognised body.
The code would require agents to publish a full breakdown of fees charged to tenants alongside any property listing or advertisement, no matter in what medium (on or off line) it is published. This breakdown should not be ‘small print’, but displayed in such a way as to be immediately obvious to the potential tenant. The proposed code would also forbid double charging and agents should inform landlords of any fees charged to tenants. If agents did not meet these requirements, any fees they charged would be illegal.
The Association of Residential Letting Agents (ARLA), a professional membership and regulatory body for letting agents and letting agencies in the UK, has welcomed the committee’s recommendations, urging the government to introduce meaningful regulation as soon as possible.
The Guild of Letting & Management, a membership organisation dedicated to maintaining and raising standards of integrity and professionalism in the residential lettings and management industry, already offers vocational training in the form of BTEC qualifications. It is equally enthusiastic about any measures that will promote a more professional approach.
The Property Ombudsman, Christopher Hamer, notes that many lettings agents are not affiliated to either of these bodies or any other trade association and agrees that a ‘full disclosure’ of fees and a code of conduct used by the whole industry is needed.
The report follows widespread concern about the level of fees charged to both tenants and landlords by letting agents. The OFT recently found that about a third of all complaints about the lettings market were about fees and charges, many of which were drip-fed after tenants had signed a contract.
Housing Minister Mark Prisk said the government is determined to build a bigger and better private rented sector that gives tenants more choice, but he wished to avoid excessive regulation. The government does propose taking action to require all letting agents to belong to a redress scheme so landlords and tenants have somewhere to go if they don’t get the service they deserve.
Eamonn Hogan – Shoosmiths Access Legal