ARLA has called on the Chancellor to regulate letting agents when he delivers his Autumn Statement next week.
Although the Autumn Statement is a precursor to the Budget, ARLA has released a statement in which it makes no arguments that regulation would bring economic benefits to the nation.
Instead, ARLA’s call for regulation concentrates on the political argument.
It says that for the first time since the 1960s, more people are now living in private rented accommodation than in social housing, with 3.8 million tenants in the private rented sector – a 17.4% rise since 1999.
Ian Potter, managing director of ARLA, said: “We fully supported the Government in the introduction of the Enterprise and Regulatory Reform Act 2013, which included a requirement that all letting and property management agents in England should be members of a redress scheme.
“This was a crucial step towards better regulation in the sector, but is not a silver bullet.
“We believe that full mandatory government regulation of sales and letting agents is the quickest and most effective method to eliminate unprofessional, unqualified and unethical agents from the rental market.
“This action is more important than ever before as growing numbers of people now rely on the private rented sector for their accommodation.”
However, ARLA is also calling for a move that does fall within the usual budgetary remit of the Autumn Statement.
Potter added: “The Government must also act to encourage landlords to make improvements to existing properties.
“A suspension of VAT on the purchases of material and labour for capital expenditure or capital allowances for home improvement work could be useful incentives to help upgrade rented housing stock around the UK.”
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Comments
So ARLA are calling for letting agents to be regulated?
Is this NEWS? I think I heard this somewhere before on many, many occasions from..............oh yes! - ARLA
Governments do not want to listen and re-telling the message over and over and over again is a complete waste of time.
Is an Agent who borrows £381,000 of clients money a rougue? Apparently not as he had the wit and means to have the intention to put it back when it was discovered what he was up to
Is an agent how uses £150,00 of clients money a rogue? apparently he is because although the intention was there to pay the money back he didn't have the means to pay it back quickly enough.
In the last few months Rogery has been defined as all sorts of things. There was a claim that producing an AST with last years date on it was enough to be rogue.
Until there is a definition of rogue and a defined set of things that agents do to be classified as rogues it is impossible to introduce and police regulation.
Offering cheaper fees is not roguery.
Lidl is not a rogue supermarket for selling Best quality Modena Balsamic Vinegar £9 cheaper than the identical bottle in Marks and Spencer and so it is with Agents.
Well over half of all agents do not use up to date tenancy agreements. Is half of the industry rogue, ARLA, RICS, NAEA, NALS and SAFE agents included?
Despite being against its own Rule 8, RICS turn a blind eye to Agents using Clients money for their own purposes so that is obviously no longer roguery.
Agents are failing anaual audits on a regular basis and nothing is said so that doesn't define roguery or even ring the alarm bell it is designed to sound.
Yes it is me banging on again but until someone who uses the cliche can define Rogue and can find a single example that has not been committed by a "professional and supposedly regulated agent" I will keep asking the question and making the same point.
One can't shout rogue just because an agent chooses not to belong to one's gentleman's club or drinking circle.
@Arnie I believe you are spot on.
@Neil if only things were that simple. Regulation could well result in only the large firms being able to offer services at lower prices, down to the fact that they have scale. Costs for small firms could spiral out of control with many closing down. Take a look at Scotland, Government intervention has been disastrous.
Formal government regulation or not, the rogues will still operate. Surely the landlords and tenants have a responsibility to themselves to do business with recognised firms that have the right framework in place. They also have the legal framework to fall back on. We can’t ever remember being asked in our lettings office if we are members of anything……
Arnie As long as unregulated Agents are able to operate at lower rates and margins which allow them to undercut regulated agents Landlords will always go for the cheaper alternative. Let them get trained, professionally affiliated and bear all the costs of Regulation and then we will have an even playing field.
It would seem that the clamour to regulate is being driven by special interest groups and a few agents rather than the market.
If landlords and tenants were that concerned about the behaviour of letting agents then they would be using only ARLA and RICS approved Letting agents.
ARLA and RICS approved Letting Agents do not cost any more than unapproved Letting Agents and the fact that both tenants and landlords don't use them is proof that they couldn't care less about regulation.
There will be costs involved in regulation and I can't see either tenants, landlords or letting agents being happy to pay these costs.
Most agents cannot even comply with the simple request to include fees on their adverts!!
What does 'fees apply' mean on Rightmove? How does that comply with the ASA requirement to 'clearly' show what fees are applicable?
ARLA are useless and spout on about regulation when most of their members would not know one end of Section 21 from the other.
Mr. Potter,
It is time ARLA started putting the interests of the membership FIRST.
ARLA has turned into a political lobbying group.
Who, apart from those on the inside of the industry has even heard of ARLA?
It will not be surprising if the membership renewals fall dramatically for next year - why pay for something which is of very little benefit.
Its simple to get regulated get a member of staff to join ARLA and do an online NFoPP course (3 mths). Go out and buy CMP and PI cover from a broker who provides non regulated agents cover. Find a suitable Terms & Conditions of business off the Internet then join NALS, SafeAgent and Ombudsman Service. Takes about 5 mths in total and nobody asks for you to demonstrate you are fully trained, have full knowledge of the inustry and experienced in your field
There is no point at all calling for compulsory regulation when the existing regulators fail to enforce the existing codes of conduct on their own members.
At present there is very little motivation to join ARLA, RICS or NAEA because not one of the traditional and once respected trade association ever stands up and says.
"Use an XXXX (insert per loyalty) agent to let your property, all of our members have a redress scheme for unresolved complaints, each agent's client account is secure and is audited annually and should all those precations fail XXXX offer Client money protection in case cases of business failure"
With XXXXproviding CMP cover rather than it being something any fly by night spiv can purchase there is an immediate differentiator and expected level of service. The regulation Ian potter is so desperate for is delivered by the one organisation capable of delivering it; ARLA!
Perhaps Mr potter should contact the ARLA MD and suggest it rather than keep yacking on to government who can not afford the policing of more regulation.
One only has to look at the cuts in Health and safety enforcement to realise that the very last thing Government want is another tier of regulation to monitor and enforce, especially when one realises how minute and localised the problems are.
Instead of trying to make ARLA membership compulsory through regulation, make ARLA membership desirable as it was before PBK started buggering around with NFoPP and its constituate divisions.
Regulation will not solve the problem, just consider the latest alleged RBS scandal, forcing small businesses to go under in order to seize assets below market value. And right under the nose of the FSA/FCA. We have a perfectly sound legal framework supporting the PRS in the UK, if this was enforced when a letting agent broke the law, the cowboys would soon disappear. For me, calling for government regulation is too simplistic and the unintended consequences could be terminal for many independent agents who provide a great service to their customers. It is almost impossible for people in the UK, who earn average salaries, to get good financial advice. IFA’s can only afford to help relatively high net worth individuals, much of this is an unintended consequence of regulation. Let the market forces and the legal system work…….. ARLA and other industry bodies have a crucial role to play in developing the professionalism of letting agents and helping landlords and tenants understand what good looks like.
The huge pressure on letting agent fee’s adds to the problem and regulation will almost certainly result in even more pressure on fees. It is not possible to provide a top drawer, professional property management service without making the appropriate charges. It is not possible to serve tenants without making the appropriate charges. All of the noise from Shelter and others is compounding the problem. Poor quality agents popping up with 5% management fees are destroying the market, here today, gone tomorrow and whilst operating making life difficult for the professional agents.
The large corporates will be the only real beneficiaries of regulation, they have the resources to deal with the unnecessary administration burden. They have the volume that allows for the centralisation of services etc. and economies of scale. Never mind the customer or service, it won’t matter how poor service this is, landlords and tenants will have limited choice with only large players surviving. Be careful what you wish for……