Does the letting industry have effective regulation?

A recent report from the Royal Institution of Chartered Surveyors seems to suggest that irresponsible landlords and agents are exploiting a ‘total lack of effective regulation,’[1] within the industry. The RICS is appealing for a total crackdown and new legislations to prevent unscrupulous landlords from turning the letting sector into, ‘the property industry’s Wild West.’[1]

Worrying

The survey showed that over two-thirds of more than 1,000 people that have rented a home over the last two years in England did not have an inventory when moving in. Responding to this statistic, the RICS said that this highlighted the, ‘worryingly low standards,’[1] that tenants now expect.

Rental sector demands have soared, with people unable to purchase their own homes. Toughened borrowing rules and the economic crisis have contributed to a rise in the cost of renting.

Concern is growing about the number of people setting up letting agencies without the correct qualifications. Their lack of knowledge, plus no compulsory codes of conduct, is highly detrimental to the sector.

Does the letting industry have effective regulation?

Better protection

Calls for better protection for people living in the privately rented sector have come in recent months. Charity organisation Shelter conducted a survey, which suggested that almost a quarter of people think they have been overcharged by letting agents. 23% of people questioned believed that they have been hit with unfair renting charges for aspects such as credit checks and basic administration.

More alarming figures from Shelter said in some cases, renters had been charged £150 for yearly credit checks, which in reality cost just between £8 and £25 to carry out.[1] Furthermore, some renters were charged £100 for a simple viewing of a property, with others charged £540 for ‘administration’ fees.[1]

Correct agents

Global residential director of RICS , Peter Bolton King, says the importance of a genuine letting agent cannot be stressed too much. He said, ‘A good lettings agent can be worth their weight in gold for both landlord and tenant.’

‘However, there are too many corrupt agents that do not belong to any professional body who are taking advantage of the current gap in regulation, putting consumers at risk.’

‘Choosing the wrong agent can result in tenants encountering all sorts of problems such as lost deposits, broken agreements and excessive charges.’[1]

Action

Mr Bolton King is also clear on what he wants to happen in the sector moving forwards; – ‘What we would like to see is the Government taking direct action on this and introducing a single regulatory and redress system for both sales and lettings agents to make sure they are fully accountable.’[1]

In the RICS survey, 87% of tenants supported the notion of one compulsory regulation scheme for letting agents being introduced.[1] Encouragingly, it seems that the Government is starting to follow suit.

Housing Minister Mark Prisk said that, ‘People living in private rented homes deserve to be treated fairly and honestly.’

‘While the report shows the vast majority of tenants are satisfied with their lettings agent, I’m appalled that some agents are abusing their position and giving the whole industry a bad name.’

‘We are determined that all tenants receive a good service, but we want to avoid excessive red tape that would push up the cost of rents and reduce choice for tenants.’

‘That’s why we have strongly backed industry-led schemes such SafeAgent.’[1]

Prisk also stated that letting agents are currently subjected to protection legislation that tenants with concerns should report them to the Office of Fair Trading.

[1] http://www.landlordexpert.co.uk/2012/12/03/lettings-industry-has-a-total-lack-of-effective-regulation/