Compulsory Licencing of UK Letting Agents

by Property118.com News Team

13:06 PM, 10th February 2012
About 9 years ago

Compulsory Licencing of UK Letting Agents

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Compulsory Licencing of UK Letting Agents

As stories of Letting Agents who cease trading owing large sums of money continue be reported, Norwich based landlord Mark Alexander has launched an e-petition advocating the compulsory licensing of UK Letting Agents to protect both landlords and tenants.

Over 4 million homes are provided by the Private Rented Sector in the UK by 1.5 million private landlords, many of whom opt to appoint Letting Agents to manage their portfolios assuming that this will be done within all applicable legal obligations. In fact Letting Agents handle large sums of clients’ money and they may be unqualified to correctly manage property within the relevant legal liabilities.

Mark Alexander said “I believe this is unacceptable and whilst not advocating that the industry be tied up in costly red tape I believe that a simple compulsory licensing structure would offer greater protection both to tenants and to landlords whilst ensuring that only the most professional Letting Agents continued to thrive.”

The licensing scheme proposed would simply ensure that redress is available in the event of financial failure or negligence on the part of Letting Agents.

A spokesperson from Knight Property Management commented on the epetition, saying “Simple, effective, compulsory regulation can only be a good thing for the industry’s reputation. I like the licencing idea, and the idea of bad agents being priced out of the market by extortionate PI premiums. That’s so simple it could actually work!”

Mary Latham, a landlord since the 1970’s and representative of the National Landlord Association and Midlands Landlord Accreditation Scheme, where she has influenced legislation before, agrees.

“Mark’s suggestion does not involve red tape, its simple and that is why it has a good chance of success.” added Mary.

Sally Lawson, owner of Concentric Lettings and a member of the Association of Residential Letting agents “ARLA” said “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 spend thousands every year on various insurances, memberships to various accreditation, client account auditing and accounting staff and procedures to do everything right.”

Mrs Lawson’s view is one also held by Mr Alexander, one that was one of the biggest factors in the creation of the petition.

“It is inconceivable that any other industry handling large sums of client money could do so without even basic best practice rules to oversee their business procedures and protect their clients in the event of fraudulent practice, incompetence or unforeseen business failure. If the Government fail to pick up on this I am hoping that Councils will use their powers under the new Localisation Act to introduce licencing. It’s a real vote winner for them in my opinion as it will clean up the industry, secure Public Sector jobs, protect landlords and tenants and help Councils to raise income to achieve their social and political objectives” he said.

To view the e-petition click here
To view background and debate around these proposals click here.


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Comments

22:14 PM, 10th February 2012
About 9 years ago

I’ve signed your petition as I know a lot of people affected by a local agent who did the same; a landlord went to the agents home to find him packing up a lorry with his furniture hotfooting it off to Spain with all the money!

I own a flat with the one below me also rented out. My tenant was having a game with this other landlords tenant so I asked him to deal with it. In the end he decided to evict her. He had a fair few properties and had been a landlord for years. Despite this I had to talk him through in fine detail what a S21 and S8 were, the appropriate dates, how to issue it and what to do next.

A few weeks after she'd gone he called me up and said 'you seem to really know your stuff would you mind if I called you for advice every now and then'.

Like most people I said yes sure, then my mouth nearly hit the floor as he added 'only I've just set up a letting agency and it would be really useful to have someone I can ask about this stuff' !!!!!!!

4:33 AM, 11th February 2012
About 9 years ago

That is a classic indication of why we need a licensing scheme for LA with liability insurance..
There surely has to be some modicum of proven competence before you can set up as a LA
It seems like your one was going to learn on the job; with you doing the teaching!!!?.
How many tenants may he inadvertantly or deliberately stitch up.
He may have all the goodwill in the world but if he is not competent how can he be allowed to set up as a LA.................oh! I forgot LA are unregulated!
Good LA must be climbing the walls with fury at how their own competencies and ultimately their businesses are being undermined by incompetent idiots who no way should be allowed to set up as a LA until they know a few things!
Just like IFA's have to undergo exams etc. why shouldn't LA.
IFA's were very poorly regulated a few years ago and now only the good ones are left as the revised criteria to be an IFA drove out the ones who couldn't pass the exams or didn't wish to pay the liability insurances.
The same thing happened with mortgage brokers.
I think I read a post from Tessa Shepperson who advised as to all the insurances she has to pay annually  as a solicitor  and there is no way she has the amount of money that a LA could have in a client account
Why should a LA not be insured to the same level or even more?

Mark Alexander

10:46 AM, 11th February 2012
About 9 years ago

Hi Paul

Having been a hostage to Financial Services regulation since it was introduced and having sat every exam set by the regulators I can totally sympathise with Lisa. The FSA have made a complete industry out of regulation and most of it is useless. I'd love to see some stats of how many people have protected their families with life assurance and pensions in the last 10 years compared to the 10 years prior to regulation. I suspect the financial security of under 30's is awful in comparison to what it was in the 80's when everybody met an advisor.

If the only regulation had been compulsory licencing and the only criteria was for advisers to have PI insurance to be licensed I suspect the industry would have self regulated far more effectively than it has done under the FSA regime and the financial security of the country would have been far better.

I have no doubt that exams and courses would have been introduced but with a view to reducing insurers risks, not to satisfy Civil Servants who know so little about the real world of financial services sales.

It is for these reasons that I am proposing my very simple licensing scheme.

Regards

Mark

17:38 PM, 11th February 2012
About 9 years ago

Yes I agree I think the insurance angle effectively introducing market probity IS the way to go.
Nothing concentrates the mind when running a business as to the amount going out on necessary insurance premiums which could get to the point you might become uninsurable due to the level of competence dispayed to the LA.
Maybe a bit like the boy-racer who has so many accidents he finds he can no longer afford insurannce but still decides to drive irrespective.

Mark Alexander

17:48 PM, 11th February 2012
About 9 years ago

When an uninsurable boy racer drives without insurance, because he can't get any, he comits a criminal offence and risks imprisonment. It's hard to track him down until he's stopped by the Police. However, it would be a lot easier to track unlicensed letting agents simply by making them show their licence in order to advertie properties to let. This wouldn't stop landlords letting their own properties as a simple check on the ownership with HM Land Registry is all that would be required on the part of the advertiser.

18:01 PM, 11th February 2012
About 9 years ago

I use upad Mark and as far as I am aware they did not check whether I owned the properties or was maybe advertising on behalf of a LL.
Clearly that area would need to be tightened up as you suggest.
I think it costs every time you check with Land Registry, will advertisers bear the cost or I suppose they would include the costing in the ad expense.

9:36 AM, 14th February 2012
About 9 years ago

I do a lot of business with small letting agents - often 'one man band' ex-colleuges or friends or people who've set themselves up when former bigger agencies or estate agents have gone 'pop'. This keeps them going and it keeps me going as they form my 'link people' into a particular town or city I probably lived in at some point before purchasing a house/houses there. I trust them and am happy to place that trust on the line, even take the risk as it were . When dealing with small scale personal scenarios I feel any kind of legislation will just ruin things for agents, tenants and landlords. Why must legislation be met with more legislation / adminstration ... 'til the whole world of accounted for agents landlords tenants dustbins doors floorboards bread crumbs and shoe laces holds together in some kind of mutual tension. I'm quite sure if the current government is in for long enough and there was less 'noise' from the landlord world to the public world, the present beings would just let HMOs and article4s die a peaceful 'as no-ones attending them so there's no point as things are fine anyway' death. Overall the question is are we all better off in a letting world of mutual trust or a world of administration sureity - mock or otherwise.
PS. To legislate tenants is not assertive enough, it is defensive. If you are going to present google links or whatever to the world, present the truth that it's not easy being a landlord it is an economical risk like any business and heavy legislation put on honest landlords is unfair unwarranted and a waste of public time and funds - lanlords of modern times have on the whole shown themselves to be a good bunch who have handled things in good and fair manner within society.


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