An easy way to regulate the lettings industry

An easy way to regulate the lettings industry

11:44 AM, 1st February 2012, About 13 years ago 97

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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

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Mark Alexander - Founder of Property118

18:19 PM, 1st February 2012, About 13 years ago

Maybe the government will do a u-turn when they realise how passionate people are about this and that it affects 15% of all households. If not, perhaps the Councils will find a way to introduce licensing schemes? It would only take one Council to realise that it's an income generation opportunity and they all be all over it, just as they are now with selective licencing and HMO licence fees. I know that Councillors and MP's read my blogs which is why I've wriiten this. I may not have the power to make the rules but I can influence them.  As they used to say at BT, it's good to talk 😉

18:20 PM, 1st February 2012, About 13 years ago

Blimey Mark if this was actually introduced half the LA would have to go out of business   LOL!!!?

Mark Alexander - Founder of Property118

18:29 PM, 1st February 2012, About 13 years ago

I'd feel a lot more confident in dealing with the survivers though, wouldn't you? It would certainly take the guesswork and luck elements out of picking a good one 😉

Mary Latham

19:00 PM, 1st February 2012, About 13 years ago

I agree with your suggestion Mark but I'm sorry to say that it does not go far enough.  BEFORE a person opens his doors as an Agent he should first know the business of those he has chosen to represent and many LA's do not know the law or regulation and get landlords into big trouble. For me there are two issue
1. Financial considerations - which your idea would cover
2. Landlords liablity for mistakes made by LA who are working on their behalf.

It might soften the blow if a landlord could claim compensation from an Agent who had dropped him in it but it would not prevent the landlord being presecuted/loosing his fit and proper person status/upsetting his tenants/getting a bad reputation...........

I know some excellent LA's but all are small private companies where the owner is involved on a day to day basis and has made it his/her business to know the law and regulation and to protect both the landlord and tenant from mistakes made through ignorance.

I would like to see your idea coupled with a minimum requirement to prove competance and continual professional development to ensure that their knowledge is always up to date

19:20 PM, 1st February 2012, About 13 years ago

Yep keep 'talking' Mark; you never know it could well have a positive effect.

Mark Alexander - Founder of Property118

20:17 PM, 1st February 2012, About 13 years ago

It's probably an urban myth Mary but I've heard that there are more words in the FSA regulation of Financial Services than there are in the Bible and Koran combined and how many people have read let alone can recite both of those! I can see how easily this happens though as the wish list for regulation grows and grows. My suggestion is based on the real version of simplification, unlike the FSA's pathetic attempts for achieve pensions simplification which quite frankly is a joke! The reality is that everything you have suggested would automatically fall into placed based purely on commercial forces affecting the simplistic structure I have recommended. For example, how long do you think it would take for PI insurers to realise that providing insurance to new operators with no formal qualification and experience results in more claims? Before long insurers would put such massive loadings on premiums for such businesses that the insurance would be unaffordable and they would never get licensed. Either that or the insurers would simply refuse to carry the risk. Either way, my simple criteria would prove to be effective without re-creating the ridiculousness of an FSA styled regime.

Mark Alexander - Founder of Property118

20:26 PM, 1st February 2012, About 13 years ago

I plan to write to all of our subscribers asking them to bring this thread to the attention of their local MP's and Councillors Paul so watch this space 😉

Mary Latham

20:50 PM, 1st February 2012, About 13 years ago

What a smart boy you are Mark.  Yes that makes perfect sense and "simple" usually has the best chance of success

21:08 PM, 1st February 2012, About 13 years ago

I personally would welcome regulation and have done for years. The problem is that Lettings is unregulated, but the English population thinks that if someone holds themselves out as a professional then they must be! But this is sadly not the case. As letting agents we have 100,000's or millions of pounds through our accounts, and if this gets into the hands of someone with debt issues or an unscrupulous edge, then this leads to closure and theft of the money in many cases, which is bad for the industry and us honest agents that spens thousands every year on various insurnaces, memberships to various accreditations, client account auditing and accounting staff and procedures to do everything right.

Only to be told by a landlord that they want to us Fred over the road who charges a few percent less and has none of these things.

23:17 PM, 1st February 2012, About 13 years ago

YOU could have bad LA quaking in their boots!!
Heres hoping you have successful responses

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