Letting Agents to be Regulated

by Mark Johnston

Letting Agents to be Regulated.

Demand in the rental sector has rocketed over the last few years as more and more people have found themselves unable to get a foot on to the property ladder, which in turn has sent the cost of renting soar.

Figures have shown that currently close to 5 million households in the UK privately rent and there are around 11,560 firms involved in lettings throughout the UK.

Therefore, industry experts and disgruntled tenants alike feel that more must be done to help clamp down on rogue letting agents.

It seems that anyone without appropriate qualifications, knowledge or even a basic understanding of the rental process, can set up as a letting agency.

Meaning that tenants and landlords are in danger of falling victim to rogue practices by agents, which also has an impact on the wider economy.

The Property Ombudsman (TPO) received more than 8,000 complaints from landlords and tenants about letting agents in 2012, an increase of 9 per cent on the previous year.

A spokesperson for the Department for Communities and Local Government, said “people living in private rented homes should be treated fairly and honestly, but we want to avoid excessive red tape that would push up the cost of rents and reduce choice for tenants”.

Research by TBR a leading economic research and strategy consultancy suggested that letting agents are fuelling the housing crisis by charging tenants extortionate fees.

A recent report from Shelter, the housing and homelessness charity, revealed that almost a quarter of people felt they had been ‘ripped off’ at some point by letting agents.

The Royal Institution of Chartered Surveyors (RICS) has also previously likened the lettings sector to the ‘property industry’s wild west’.

Since 2008 estate agents have been required by law to be part of an approved redress scheme, letting agents however are not.

Peter Bolton king, the Royal Institution of Chartered surveyors (RICS) global residential director, states “the government needs to act, not just to safeguard the thousands of tenants and landlords who fall victim to unscrupulous practice, but also to relieve pressure on the wider economy”.

Many property industry bodies have called for the government to bring letting agents under stronger regulation and to also set out minimum professional standards. All in all they would like a full set of new legislation to cover this part of the industry.

However, the housing minister, Mark Prisk, claims that this could lead to both innovation and competition being stifled in the sector.

Ian Potter, managing director of the Association of Residential Letting Agents (ARLA), says “if there is seen to be a robust procedure then that is itself a deterrent”.

So with all this the government has just this month set out some new rules for letting agents that will require them to become a part of the government approved scheme, which means they will be regulated and will have to follow guidelines to adopt best industry practice.

Any agency who does not sign up to the scheme could potentially be banned from operating and if anyone breeches the orders of the ombudsman it could result in a criminal offence.

 



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