An easy way to regulate the lettings industry

by Mark Alexander

11:44 AM, 1st February 2012
About 9 years ago

An easy way to regulate the lettings industry

Make Text Bigger
An easy way to regulate the lettings industry

There has been a lot of discussion on Property118 in recent weeks about Letting Agents, regulation and trust issues. That’s hardly surprising given the number of reported instances of the closing down of Letting Agents whilst owing landlords rent and having failed to protect deposits. We have also witnessed an increasing level of debate surrounding the competence of agents.

The government have announced their intentions not to regulate the Lettings Industry and that has stirred up mixed reactions. Those in favour of regulation obviously include people who have lost money but also some Letting Agents would welcome regulation to put the cowboy operators out of business and get the market share they believe they deserve. On the flip side those opposing regulation are fearful of the costs and the impact on the industry based on the reality of what has happened since the FSA begun to regulate financial services. Now in my opinion that really is bureaucracy and red tape gone mad.

Why does regulating the Letting Industry need to be so complicated?

I take the point about ARLA bonding only protecting clients money but don’t their members also have to carry Professional Indemnity Insurance to indemnify themselves against negligence claims? I also accept the point on what happens if they subsequently lapse memberships and policies and I think statutory regulation with effective checks and balances is the only way to enforce against that scenario. Make bonding and professional indemnity insurance compulsory and that’s the problem sorted so far as I can see.

A bit of lateral thinking and a simple licencing scheme is all that would be required to regulate this. The rest would be down to market forces because if Letting Agents were incompetent their Professional Indemnity Insurance premiums would rocket as a result of claims. This would eventually close down those who don’t perform as they wouldn’t be able to renew their licences without proof of bonding and Professional Indemnity Insurance. I suspect insurers would also look to reward those who undertake recognised Continued Professional Development and get qualifications through discounts on PI insurance premiums.

It’s really that simple to regulate Letting Agents if you think about it. Three pieces of paper to check every year and it’s sorted. The Councils could raise revenue from the licencing and use Trading Standards to close down unlicensed operators. Another simple enforcement tool would be to make it illegal for the media (on and offline) to carry advertising for unlicensed operators.

What do you think?

I believe so strongly in this I’ve created an e-petition.

Please click here to sign the petition for compulsory licensing of Lettings Agents to protect Landlords and Tenants

Comments

Mary Latham

18:34 PM, 12th February 2012
About 9 years ago

Good point Ian that will be like HMO licensing where not only do standards vary across local authority areas but costs vary from £250 to over £2000 for the same licence in a similar property and that is just simple wrong.

I hadn't thought about the MOT and road tax aspect I expect this would be like the licensing authority being able to access data on HMO licences (this should be straight forward) EPC's (on national record now) Gas and Electric Safety (these are held by the awarding bodies).  A landlord should not need to do anything all this information should be easy to collate and can be checked when the landlord applies for a licence

Howard Reuben

9:41 AM, 14th February 2012
About 9 years ago

I have been a full time residential landlord for over 15 years and totally agree with the licencing of all letting agents to protect landlords and tenants.
Landlord associations where set up to 'protect and promote the interests of private landlords' and I wondered if you have asked them if they support this initiative?
Appreciate your views on this ?
 

21:16 PM, 14th May 2012
About 9 years ago

hello

I recall that there is in the various pieces of legislation (Estate Agents Act) which enables the Secretary of State to issue legislation to make only suitable qualified and/or certified people - able to call themselves 'Estate Agents'.

It happens in America and makes for a certain level of competence.  i know trhe RICS has tried to ensure thoise who call themselves EA and are RICS memebers do carry out thier duties to a certain standard.

However, despite the need, the Sec of State has not implemented the legislation to make sure that certain minimum standards are met.  it doesn't need any more legislation - just to action that which is there at present.

For a view from the office of fair Trading see the notes from one of their training sessions on :-

http://www.tradingstandards.gov.uk/kent/presentations/OFT%20EA%20training%20seminar%20pres.pdf

See page 18 which talks of an ability to negatively lisence but not to positively lisence to stop the problems before they occur - on the grounds of having a market open to entry by all if so inclined.

Mmmm - why not make door / security staff lisenced in such a way and only censure them as and when a 'bad apple' occurs and members of the public are harmed.

Any case - I am not an Estate Agent and do not have a direct interest in making a minimum standard for Estate Agents upon whom many people place a significant reliance.

I am a Fellow of the |RICS and i am fed up with being associated by people who do not understand the industry calling me an 'Estate Agent' due to the number of 'bad apples' in that unlisenced and poorly checked area.

Mark Alexander

22:07 PM, 14th May 2012
About 9 years ago

Perry, as you correctly point out, it is compulsory for Estate Agents to be regulated under the Estate Agency Act and to subscribe to an Ombudsman scheme. However, that act does not apply to letting agents and client money protection is not regulated for letting agents, it is, however, for landlords. This means that when a letting agent fails in his duty of care to protect a tenants deposit it is the landlord who is held liable.

10:28 AM, 1st January 2013
About 8 years ago

I have been a good landlord letting through an agent for approximately 7 years. I have a happy tenant who wishes to stay on. Unfortunately 4/5 years ago I was advised to plead guilty to an assault (I was being abused during an asthma attack) because the other party was termiinally ill by the time it came to trial, and I didn't have a witness. This is not yet spent so does that mean a licence would be refused? Also I go through a reputable letting agent who does detailed checks on both myself and the tenant, and on this last point alone I feel it is an expensive waste of time and money. I am 65 years old. Margaret.

Mary Latham

14:27 PM, 1st January 2013
About 8 years ago

Margaret If you needed an HMO Licence your unspent conviction would prevent you getting one in your own name. However, if you are prepared to give complete financial control to someone else they can become the Licencee for you. A Letting Agent can only become a Licencee if you have given them complete financial control, very few landlords do that, and therefore the issue of your status is not relevant to using a Letting Agent and, in fact, if you do not need an HMO licence it is irrelvant to managing your own property.
Follow me on Twitter@landlordtweets

3:41 AM, 2nd January 2013
About 8 years ago

YOU were being abused during an asthma attack and you pleaded guilty to assault, were you crazy or what!!!
Who cares what the life status of any party was;
If you didn't do it don't plead guilty!!
I suggest you were very poorly advised and this will now stay with you for many years.
In fact if you went for a job as one of these Police Commissioners , no conviction is EVER spent.!!
But as you are now on the down slope of life it won't have that much effect.
But remember you have to advise any insurance company you have dealings with as it is a material fact.
They may well refuse to insure you or charge you more.

1 9 10

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER

Any case law of eviction prejudice against landlords?

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More