Still no regulation for the letting industry
We were disappointed to read that the housing minister, Grant Shapps, has once again rejected the suggestion to licence letting agents. In spite of the recent cases of rogue landlords and collapsed letting agents, Shapps considers there to be enough voluntary regulation already in place.
The ‘voluntary regulation’ he refers to is trade body or accreditation schemes (such as ARLA, NAEA, NALS or RICS) which ensure that their members operate to certain standards. But the reality is that only about half (or less) of agents belong to these schemes, and many customers might not know how to tell if an agent does or doesn’t belong to one. Indeed, a recent Labour policy review estimates that over 4000 managing and letting agents are not regulated at all.
The policy review document notes: “It is a peculiarity of current policy that while estate agents, who hold very little money on behalf of their clients, are regulated, letting agents who hold significant sums on behalf of landlords and tenants are not.” This allows unscrupulous agents to act in their own interests, undercutting the responsible agents and spoiling the reputation of the industry overall.
The Residential Landlords Association is now calling on landlords to ‘starve out’ these unscrupulous letting agents by only supplying property to the professional, qualified letting agents (and not just instructing the cheapest). Part of the problem is that the public don’t know that letting agents are not regulated and are more concerned about who has the most boards or the lowest fees and not about how qualified an agent is.
Ian Potter, Managing Director of ARLA, suggests key features to improve the industry such as mandatory recognised qualifications (part of the reason we are investing heavily to become Oxford’s most professional letting and property management agents). ARLA also suggest client money protection and the ability to be banned from trading in a fair but robust manner. We believe that appropriate regulation would greatly help to prevent fraud letting agents using clients’ money (to pay staff salaries, company bills or who-knows-what).
Without regulation, anyone can set up as a letting agent without any need to provide safeguards, conform to any requirements, or register with a redress scheme. This means that any agent who has previously gone bust can set up again and handle clients’ money again. An agent who is neither qualified nor a member of an industry body means the customer has absolutely no protection against the deposit, rent owed, etc.