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

Mary Latham

14:53 PM, 9th February 2012, About 10 years ago

A recent NLA survey of members has found that 81% consider letting property to be their pension fund.  My concern is that many landlords do not realise that letting property is not like other investments and cannot be a passive investment.  Landlords often buy property and put it in the hands of LA's so that they do not have day to day involvement and this is why it is so vital that those LA's get it right.
 
NLA report here
 
http://c.moreover.com/click/here.pl?z5890202129&z=1550248679

Mark Alexander - Founder of Property118 View Profile

20:42 PM, 10th February 2012, About 10 years ago

Please see our latest Press Release on this subject. Comments taken from this thread.

http://www.property118.com/index.php/compulsory-licencing-of-uk-letting-agents/24228/

Gareth

9:49 AM, 11th February 2012, About 10 years ago

I have PII cover and I have a recognised bank account designated as a "client money account" (two of them in fact - one for day to day client money and the other for long term deposits held) but I can't find anywhere I can buy insurance similar to the ARLA client money insurance offered to their members.

I'm not eligible to become an ARLA member (or wasn't the last time I looked into it) and not only that I suspect they make money by charging members for the client money bond as the charge to their members must way more exceed ARLA's actual cost of the bond. I'd rather get my own insurance and remain independent.

Any ideas how I get this client money bond insurance as an independent?

Mark Alexander - Founder of Property118 View Profile

10:17 AM, 11th February 2012, About 10 years ago

I am not aware of an insurer who offers bonding to independent at the moment but I have to admit to not spending too much time looking around. The simplest way for you to operate would be to set up TDS or MyDeposits accounts for each of your landlords and to allow them to hold the deposits. When Licensing does come into force though I'm sure it will not be long before the insurance companies recognise the opportunity.

As a matter of interest, why would you choose to hold client monies when you can't offer protection? Why wold your landlords and tenants be comfortable with that when they could insure the money and self insure?

John Curtis

10:36 AM, 11th February 2012, About 10 years ago

Hi, just signed the petition and I was number 71, only a few more to go!!!

11:09 AM, 11th February 2012, About 10 years ago

I agree LA took my deposit yet i had to pay it back to T. Stole rents from me. Stole one tenants stupidly put through agents door. I got 10p in the pound back after the office furniture took priority. Had to borrow from parents to get over this yet agent was up and running again. Letters of York. Never used an agent again. Stay away from them.

Mark Alexander - Founder of Property118 View Profile

11:10 AM, 11th February 2012, About 10 years ago

It was never going to be easy to get 100,000 signatures and there's no way I can do it on my own. However, if everybody who has signed asks everybody they know to sign and tell everybody they know and so on it is achievable.

17:27 PM, 11th February 2012, About 10 years ago

I have to say I disagree - PII and bonding would add ridiculously to cost if I did any agent work for friends on a freelance basis - which I consider myself more than competent to do having been a private landlord for much of the last 25years.  Really I think it's caveat emptor on both sides.  Already in Scoltand I have to register with every local authority (paying a fee for registration and per property) where I let property.  The problem with the finance industry was de-regulation or inadequate regulation with a farcical public pretence at regulation.  The UK is over-regulated and has excessive legislation in all sorts of areas but with a total failure to implement most regulation and legislation appropriately - in fact that's why ppl keep asking for more - because we fail to implement what's meant to be there.

Mark Alexander - Founder of Property118 View Profile

17:39 PM, 11th February 2012, About 10 years ago

I sympathise with your dilemma but if you are expecting your friends to trust you with their money is it not fair for you to be able to demonstrate that it is secure regardless of your circumstances? If you simply help them to let property and offer maintenance for a fee that's different as they can protect their own deposits and collect their own rents.

17:45 PM, 11th February 2012, About 10 years ago

Got to advise you there is no way I would let you have my £5750.00 in deposit monies unless you had a liability insurance bond.
I couldn't care the less about your business costs, you either have the bond or you don't get the business.
This would be one of the costs of being a good LA who acts with full probity.
Without the correct insurances YOU are not a good LA and I wouldn't use you.

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