Property Inspector: Should letting agents be regulated?
TheMoveChannel.com´s Property Inspector, taking a closer look at global real estate each month.
In February´s podcast, the Inspector investigates the latest calls from the Office of Fair Trading to regulate the lettings market. Analysing 4,000 complaints received by people renting a home, the OFT found 1,557 of them were about fees and charges, while 1,211 were about agents providing a poor service.
They follow similar statements from both The Property Ombudsman and the Royal Institution of Chartered Surveyors. With the number of tenants still on the up, the market is now a £1 billion per annum business, handling £14 billion per annum of clients´ money.
At the moment, though, anybody can become a lettings agent. There are around 11,500 letting agents in the country – but the exact number is unclear because there is no single, official register. This system, which opens itself up to loopholes and abuse, sees horror stories from tenants or landlords regularly appearing in the media. Indeed, complaints to The Ombudsman were up by 12pc in 2012 compared to 2011.
The Royal Institution of Chartered Surveyors has described the rental sector as “the property industry´s Wild West”.
Are they right? Does the sector need a sheriff? Should lettings agents be regulated?
The Property Inspector sits down with James Davis, CEO of the UK´s largest online letting agent, Upad, who argues that the sector needs educating – not regulating.
The RICS described the lettings sector as the “property industry’s Wild West”. Is that a fair description? Does it need a sheriff?
“I think the amount of rogue landlords or agents are a very small minority but they tarnish the sector. I think having a sheriff or compulsory licensing of some form would have a disastrous effect in driving rogue agents underground and would make them harder to track. It’s important to keep things above the surface and to make landlords and tenants both aware of the Kitemarks to look out for that relate to best practise and trust.”
Complaints increased last year as more people became tenants. How widespread a problem is this?
“The OFT have had 4,000 complaints and The Ombudsman received around 8,000 complaints. To put that into perspective, those 12,000 complaints in the last year have come about from the 2 to 3 million tenancies that were created last year – well less than 1 per cent of all tenancies. Of course, there are more complaints as the rental market is growing, but we need to keep it in perspective.”
If agents were trained to a certain standard, would that be enough, instead of full regulation and enforcement?
“There are no regulations for landlords to train as such. It could be argued that there should be; the reason for the rising number of complaints is partly because there is no formal training for agents, landlords or tenants. It’s not surprising that there are complaints if all three parties haven’t had formal training.
“There are voluntary schemes now, such as ARLA [Association of Residential Letting Agents], of which I and Upad are accredited members. What that offers is protection against money laundering, secured deposits, but it also means that they’ve done professional exams, which are the equivalent of an A-Level, so that the person you are dealing with understands what the lettings process all about. But only a minority of letting agents are actually members of ARLA.”
Should there at least be some kind of official, compulsory register, so that we can track agents in the country?
“What I think makes more sense is to make tenants aware of what to look out for – like whether a landlord is a member of an accreditation scheme or how long they’ve been trading for, and using those Kitemarks that are out there, maybe go on the ARLA website to see what agents are operating in their area, to know that they are moving into a property where that landlord is a professional.
“From a tenant perspective, tenants should look beyond the property and at whom it is being letted by. Is that agent ARLA accredited? Is their landlord a member of the NLA [National Landlords Association] or the RLA [Residential Landlords Association]? Do your own due diligence: “Buyer beware” is the important phrase.
“Landlords have a choice as well. When they want to let their property, they can self-manage through notice boards, like Gumtree, use a traditional high-street agent, or an agency like Upad, where we explain our fees clearly and have a wealth of information online about how to run your property as a business. Whichever you look to use, do you your own due diligence, make sure your letting agent is accredited, or look at other testimonies from landlords.”
Notes to Editors
Property Inspector image courtesy of Snowshot.
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