An easy way to regulate the lettings industry

An easy way to regulate the lettings industry

11:44 AM, 1st February 2012, About 11 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



Comments

19:43 PM, 2nd February 2012, About 11 years ago

Hi Sally

How would you feel about a landlord being able to access all his properties accounts and records 24hrs a day, 365 days per year from anywhere in the world with internet access. Surely this would be the ultimate security for a Landlord. I can do it for my bank account why not my portfolio.

19:48 PM, 2nd February 2012, About 11 years ago

Hi Reg
Unfortunately the world is full of these examples, eg Recruitment Agencies, Estate Agencies to name but two, both of which are regulated and to my own personal knowledge still full of Fred in The Shed type jokers.

It is only when the Agency Profits are directly aligned with maximising the income to the Landlord will this be resolved. At this point the LA becomes an Asset Manager for the Landlord rather than seeing the Landlord as a profit centre.

Mark Alexander - Founder of Property118 View Profile

19:55 PM, 2nd February 2012, About 11 years ago

To all in favour of my suggestions, please check out and sign my Government e-petition http://epetitions.direct.gov.uk/petitions/28848

Roger, I agree that Landlord education needs to improve and I also beleive that good landlords deserve more recognition - please Google search "The GOOD Landlords Campaign" on Property118

19:57 PM, 2nd February 2012, About 11 years ago

Hi Paul

I thoroughly agree with you and believe the responsible organisations representing landlords need to come together to determine an educational initiative for landlords. At meetings I regularly come across another individual who is setting themself up as a Letting Agency and often their lack of knowledge and understanding of the industry is staggering.

on your lack of trust.

How would you feel about trusting a Letting Agency that was so confident in its ability to support their landlords that they were prepared to offerthem  an entirely unconditional refund of ALL management fees if a landlord decided to withdraw their portfolio in the first 6 months.

You are trusting them with part or all of your portfolio, they are trusting you to properly evaluate their service rather than cynically get your properties managed for free for 6 months.

Mary Latham

20:48 PM, 2nd February 2012, About 11 years ago

Roger Accreditation based on education does what you suggest NLA have a national accreditation scheme, LLAS & MLAS have regional schemes, the whole of Wales has a national scheme and all these are based on the following

1. A one day foundation seminar 
2. A code of conduct
3. Continual professional development
4. An arbitration system for complaints which can result in loss of accrediation in the most serious cases and other sanctions for those that are less serious but where the Landlord has broken CofC

Each scheme will passport a Landlord, at no cost, who is accredited by one of the other schemes

The cost of this type of accreditation is from £80-150 depending on the scheme and accreditation lasts for 5 years.  Renewal is free for those Landlords who have gained 50 CPD points over the 5 years, CPD points can be gained at no extra cost or Landlords can choose to attend CPD seminars and pay a small fee.

Mark I have just signed and Tweeted the petition and I hope that this will form the basis of distinguishing the good LA's from the others and that once the scheme you propose is in place education becomes part of it.

Mark Alexander - Founder of Property118 View Profile

20:52 PM, 2nd February 2012, About 11 years ago

Thanks Mary and rest assured you have my full backing on Landlord Accreditation through regulation. We just need a sponser now to Google search and read all about "The GOOD Landlords Campaign".

Mary Latham

21:01 PM, 2nd February 2012, About 11 years ago

Ian, It makes me very uncomfortable to read posts on public threads that could perhaps have been private messages.

I stopped posting on one forum because of this type of comment. It would be a pity if people felt vulnerable posting on fora like this one and I am certain that this is not your intention. 

Mark Alexander - Founder of Property118 View Profile

21:05 PM, 2nd February 2012, About 11 years ago

Here, here Mary. I'm glad somebody else feels this way. For your own piece of mind, rest assured that every single post on this thread is moderated by a human being, often me personally. I would not have allowed this to escalate and I am very pleased that Sally responded as she did with an offer to discuss this matter in person with Ian.

Mary Latham

21:18 PM, 2nd February 2012, About 11 years ago

Yes Mark I do know that and this is why I came back to post on the thread. Having been a target of this style of post yourself I know that you will not allow P118 to become a "pillary"

23:55 PM, 2nd February 2012, About 11 years ago

Hi Mary

I understand your message that Landlords need to educate themselves about their responsibilities and recognise that NLA do a brilliant job for those professional enough to take the courses.

The point I was trying to make was that we should also be attempting to educate them into what exactly at top class Letting Agency could and should be providing to them as a service and therefore how to identify an agency that will provide them with the protection they need. Many landlords go to an agency expecting them as the 'professionals' to do what the NLA courses attempt to teach Landlords. This is what they pay a professional agency to do and unfortunately many of them don't, even though the profess they do so.

I would love to work with you and the NLA and others to try to get across to all Landlords big and small the dangers of going to the wrong agency and how to identify good from bad. I want to take the 21st Century Letting Agent Campaign and make it a vehicle for change in the industry which it so badly needs as evidenced by this blog.

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