Eric Pickles’s ‘ambitious’ reforms of the private rented sector, which include a Tenants' Charter, completely fail to tackle the problem at the heart of the industry.
Paul Weller, managing director of lettings chain Leaders, said that the only measure that will work is regulation to stop bad agents operating.
He said that allowing agents to set up without knowledge or moral scruples was like allowing people to take to the roads without having to pass a driving test.
He said that in the 30 years Leaders has been operating, there have been countless reforms, schemes, rules and regulations introduced to raise standards in the industry.
Weller said the latest reforms – like all those before them – fail to deal with the real problem.
He said: “The fact is, letting agents – the people entrusted to let and look after rented property – are not regulated.
“You can have as many worthwhile laws, regulations, schemes and charters as you like – but if there is no regulation of the people who are supposed to abide by them, then only the good agents will do so, whilst the unscrupulous will continue to flout the law whenever they please.
“The solution is simple. All letting agents should be licensed to practise, and if they are not, it should be illegal for them to operate. Rather than acting after they have broken laws and let people down, as is the case now, they should be prevented from practising in the first place.
“We already have many sensible laws governing letting but, under the current system, anyone can set up as a letting agent with no qualifications, experience or knowledge of the legalities of letting.
“It is like stipulating laws for motorists in the interests of road safety and then allowing people to drive without having to prove they are capable or know the rules of the road.
“It should be mandatory for letting agents to be qualified, with a sound knowledge of the laws governing lettings; to abide by an agreed code of conduct; and to have Client Money Protection and Professional Indemnity insurance.
“ Landlords who do not let their properties through a regulated letting agent should be licensed.
“This is the only effective way to protect the public.”
He added: “A letting agent typically holds thousands of pounds in tenants’ deposits and landlords’ rents. With all these responsibilities – and more people renting and letting every year – how can it be right that letting agents are not regulated?”
As more reforms are introduced to the lettings industry without tackling the core issue of unregulated agents, Weller warned that landlords and tenants may become more susceptible.
He said: “Many will have faith that the reforms are indeed protecting them, not realising that because agents are not regulated, not all will necessarily comply.”
In a recent survey of more than 5,500 of its tenants, Leaders found that almost two thirds (63%) were unaware that letting agents are not regulated.
It also found that just 42% of tenants considered membership of a professional body to be very important when choosing a letting agent. By comparison, 70% said that choice of available properties was very important to them in choosing their letting agent.
Weller said: “A high proportion – 40% – of letting agents are not members of a professional body, so it is clear that the public remains at risk.
“How many more tenants and landlords must be let down before the Government will regulate an industry that has been crying out for such measures for decades?”
Paul Weller is not the only one to be unimpressed by Pickles' reforms. See also today’s blog.
Comments
The irony is if regulation, in the form of licensing was brought in, I can see the headline: "Leaders letting agent chain denied licence."
The only thing they lead in is mediocrity.
How many agents do you encounter that think they're local experts and yet turn a blind eye to disgruntled tenants and landlords?
What would you train lettings agents to do? Click buttons on property management software, pick up the right keys to the right property and try to keep a straight face while justifying extortionate admin fees while clicking print on Word?
Lettings agents exist, and behave poorly, because landlords are lazy and negligent. It's the landlords that need licensing to make sure living conditions are up to an acceptable standard and tenants aren't used as a gravy train to easy profits without any due diligence.
Lettings agents are just proxy for a landlord. They aren't professionals and merely do the grunt work landlords cannot be bothered to do. Landlords are the culprits of most tenant complaints.
How can anyone who wants to talk to you get in touch?
@Andy you make some good points, however can you think of an effective regulator in the UK?
that leaders bloke has a rather charming and approachable demeanor lol
The Corporates will be the very ones to suffer from regulation, I think it is fair to say that corporate agents do not attract the highest calibre of staff and once employed the corporate structure means that staff retention isn't brilliant. Training up transient staff from a low starting point is expensive and if regulation means higher standards then the corporates are the ones with the biggest and almost constant training bill. The corporate bean counters won't like that as it will hit hard on the bottom line.
Any level of regulation will be easily achieved by the very vast majority of independent Property Management firms, Trade body regulated who offer a lettings or tenant find service shouldn't have any problem either.
Regulation will hurt the small lettings/ tenant find only firms that rely on one hit landlords and tenants.
The reason why people like Paul and Eric RICS and ARLA don't like what is going on is because it is the parasite one hitters that are simply un-controlled and uncontrollable. They set up, don't have a track record of service or landlord loyalty and rely on cheap fees to the landlord, supplemented by excessive fees to the tenant. Without explaining the difference to often industry naive/ ignorant tenants they do not make it clear that theirs is only a fleeting part in the transaction and that once they move in they are at the mercy of the landlord, they are not Property Managers.
By their nature the cheap landlords are the sort of character to save a few quid on fess and maintenance and so the recipe for complaint is mixed, with 'roguery' the result.
Instead of Paul calling for regulation he ought to be spending a bit more time showing Leaders how to overcome the real issue of parasite tenant find firms who invariably will print off any old AST's as part of their charade and leave a trail of problems behind
Every industry has its bottom feeders I suspect the real issue is that these transient tenant find parasites are a localised feature of London and the South East market which is where most of the bellyaching about rogue agents is coming from.
Can anyone reference an effective regulator in the UK? Regulation will help the corporates and consolidators, it will not help customers or the small independent agents who do a great job across the country. Costs will rise, value will evaporate and customers will still be disappointed, perhaps even more often than they are today.
NALS agent - er, .....I think that is what I said, though I am not sure what an 'umbrella' organisation is?
Any agent that isn't ARLA is a rogue and anyone not agreeing that the Emperor's new clothes are the very finest anyone has ever seen is trolling?
The bit about two people who are respected might be correct, I have far more respect for people like Eric and Paul than ever I have for people like King, Hamer and Robb however having respect for them does not mean I am not allowed to challenge their opinions. Because I choose not to post under my real name, in the same way as Eric posts as EW, it does not mean that my opinion is not valid even if it differs from yours, Eric’s and Paul’s
The reason you want me to post under my real name is to dig around looking for dirt to sidetrack the debate rather than discussing the points raised. If I revealed I was say Zulfiqar Hussain from Oxford, you would all scurry off to Google and claim the reason I am anti this than and the other is because I am the Grand Master of all that is bad in the industry.
Possibly you need to understand that all I want is for someone to qualify and quantify what and who the problems are before chanting a popular mantra handed down to us all via the media by a very small group of people who have a financial vested interest in regulation.
There are people earning a living off the back of creating false mischief in our industry and an ignorant media happily publishes anything they say. The latest from Shelter is that 50% of rented accommodation is un-inhabitable. We have been told that 25% of the population have been fleeced by letting agents off the back of spurious data and loaded question, targeted, research.
No-one is challenging statements like 'the Public remains at risk' when clearly official figures show that the cash lost to rogue agents (including RICS and ARLA members) is 0.00033% of the PRS annual rent role and other complaints is 1/10th of 1 percent of all tenancies. Yet it seems that anyone who says “err wait a minute what risks remain to the public?” is suddenly a troll.
@Kensie - interesting link - thanks.
Has anyone else noticed that half the T&C's are actually copied from RICS - its even branded!! But CM Protect have added their name at the bottom?
Have RICS sold out?
Open market CMP products are very dangerous - they have been set up as commercial entities to sell insurance - you have to be a member to buy it, but thats their only criteria.
TPOS endorsing it is very dangerous. Are they becoming a regulator or commercial sales agent? The other ombudsman schemes remain anonymous. TPOS have opinions on everything. Read their terms and conditions - interesting stuff.
http://www.cmprotect.co.uk/wp-content/uploads/2013/06/cmp_4011-TCs-20pp-A4-WRES-FINAL.pdf
And who is behind CM Protect? My Deposits Eddie Hooker is one director - My Deposits are chaired by UKALA's chair.
NALS are not a trade association. They were set up as a licensing body and were intended as an umbrella body.
I totally agree with everything that Paul says. However, the practicalities of the introduction of regulation and qualification are far from simple.
Ironically, it was John Prescott's ODM that seemed to be starting to logically address the matter by giving significant financial backing to NALS. My take was, "why would HMG be funding a lettings trade association unless it had future intentions as to role in the sector"? It was positioned as an accreditation body (kite mark) and I always thought that it would form, what I called, 'the minimum entry portal into the lettings industry'. As this was before the 2004 Housing Act and ultimately TDP, it seemed obvious only agents agreeing to comply with NALS' basic accreditation would be legally allowed, for example, to hold deposits (within an insured scheme), otherwise they would be compelled to use, what was to become, the custodial scheme? Rent etc would be covered by CMP. Legislation would enforce that position.
Moving forward, unless agents having complied with that basic criteria then graduated into the ARLA / NAEA qualification regime, NALS would ultimately introduce a qualification standard of its own. Given the timescales, that would probably have been about now.
However thanks to possibly the RICS lobby and ARLA's perception (under Adrian Turner) that NALS was a threat – even though they sat on the board, having seemingly perceived it as the potential industry regulator that it saw itself as becoming, that didn’t occur.
The good thing is that the framework still exists and could be started again very quickly, the bad news is that transitory politicians and low quality civil servants who don’t understand the issues, are unlikely to address the problems.
The emergence of a plethora of Ombudsman facilities commercially supporting ‘open market’ CMP products, none of them remotely interested in maintaining and monitoring industry standards, is an entirely unwelcome development, driven by cynical financial opportunism?
Senior figures in massive companies want it. Small agents don't. I wonder why that is?
Do you think Leaders, a massive organisation, would waste time asking for this if it wasn't justified. One of many massive companies pleading for regulation. Nothing happens.
I see people working out of their cars, people not paying VAT, PAYE and NI, people ignoring gas certs, epcs, stealing, lying, copying photos off the internet from a rival, all sorts, because they know they can get away with it. I've seen an agent with four mobile phones before, necessary if you are doing things properly?
A local "rival" went bust recently, leaving dozens of people 1000s out of pocket, whilst he retains his nice 5 bedroom semi-detached within a few miles of his office. Funny that.
Interesting article and comments. We hear a lot about regulating everything in this country so it is interesting to see a realistic comment which says that sometimes the regulation is just not worth the cost except for the very few people who get caught out.
Paul Weller does make one point that I think the vast majority of people screaming for regulation forget. If we are to regulate agents by licensing then we need to train them and only grant a license after they have passed an examination. Without that training an incompetent person will always be incompetent, licensed or not.
Holding a license says that a person knows how to be competent even if they do not manage to live up to this high ideal in true life. Still this is of no help to the few people who do get caught out. Ultimately I believe all of us are trying to prevent dishonesty and a dishonest person will always be dishonest, licensed or not. This is the real problem.
The usual way to stop dishonesty is to force practitioners to hold a license to practice as, for example, our doctors must have. We have more than enough laws to trip up a dishonest person without more training. Of course training is a good idea for honest people so they do not 'accidentally' fail customers.
If we do license agents then it must be understood that they can very easily loose their license which allows them to trade. There are many instances where councils issue licenses, taxi drivers, market traders and so on. Such people are not known for being highly educated and trained but they know enough to make sure they do not do something to lose that license. I think this approach is sufficient. It is clear and simple and low cost if we refuse to allow the lawyers to set up vast complications by way of appeals and whatever.
There is vailidity to the comments regarding what of the issue exists. As someone who was in the regulated financial sector for 16 years before this, they kept facts and figures so issues were a) known and b) the extent of the issue measured. That said issues still arose despite regulation.
In short yes a good point well made in that when dealing with vast amounts of money all activities should be regulated but to keep regulation valid and addressing whatever current issues are there, thus keeping faith in the regulation, it must evolve by keeping statistics of what goes wrong, where and why so it can address problems swiftly as they arise.
Those involved in the industry need to be operating on an even playing field and have a base level of entry to eradicate the bad apples beforenot after problems arise. This is in the interests of both the Lanlords, tenants and the profesional agent
Here here, the sooner these rogue agents - often working from a serviced office or the back of their car - are served an injunction from working in the Agency industry the better.
In an increasingly competitive market often times price is the only thing customers care about, with blatant disregard to the consequences. Silly really for any property let alone at today's prices. Would you have a Rolls Royce serviced by some jack the lad off the street? no. Would you let your quarter million pound flat for peanuts through an unregulated Tom Dick or Harry??
About time these rogues are clamped down so that we can focus on service rather price.
The reason the numbers are so low is because
a) Tenants take the crap as often they dont know better
b) There is no one to complain to
c) They want the property so accept it as the norm
d) no one is keeping a central database of complaints and all these are issues are fragmented between TPOS, Shelter, CAB. TSI. LA's etc - and those are just the ones who bother to take it further
People have their heads in the sand and have NO IDEA how far reaching this is.
@Sorry Mr Weller you are wrong
You are the chap would trolled Eric Walkers interview as well. Stop talking nonsense.
Paul Weller has made some excellent points which mirror those in Erics interview as well. Two people who know what they are talking about and are well respected versus an anonymous poster....
Why dont YOU write a blog for LAT then we can see your points and your experience
Excellent points well made.
I agree that unless there is compulsory regulation & insurances and consumers have teeth in the form of a proper body to which then can address issues then all the registers and licences in the world will fail. No one intent on doing wrong will opt into something which catches them out.
Very well said, it is all about trying to control the competition!
I am not alone!
I think this is just an easy way out for agents to stop competition. The post below is correct - the problem is minor and only fuelled by media.
From what I've seen over the last year, Lettings (& estate) agents have become lazy - portals like Rightmove & Zoopla do all the marketing for them in a very standardised way & so they just sit back and reap the rewards of a buoyant demand. If they put more effort into upping their own game, they wouldn't need mandatory regulation to create barriers to entry - like most other industries out there, they would have to just work harder to differentiate their company, thereby standing out from their bad competition.
Paul stick to your signing job.
Agents will only 'go underground' ;-)
Exposing rogue agents is the only way to do it. If consumers know what agents to avoid or what agents to use then this will work much better than regulation.
Remember how are foreign tenants going to know about this before they arrive.
This is where review sites like Allagents come in to play
And the reason you are wrong is that all this talk of rogue agents and failure to deal with the as you only vaguely describe 'the real problem' is that no-one has defined what and who the problems are.
The reluctance to licence or further regulate the industry comes down to the fact that the cost to government and the industry to introduce and police licencing is far higher than the cost of the problem that exist.
Last year there were a rough total 4000 upheld complaints against Agents or Landlords; 4000 out of over 3,600,000 tenancies. As a percentage 4000/3,600,000 is simply insignificant and not worth bothering with but for each and everyone of the 4000 the loss of money , the excessive fee or eviction really is a huge and life dominating issue. Unfortunately not all of those 4000 complaints were against non trade body agents, no-one kept track of the financial loss in each case, no-one identified who or what was to blame for the issues in a form that was in anyway useful or meaningful. So I would say that until someone takes responsibility for qualifying and quantifying 'the real issue' press releases and statements like this are simply self serving self promotion by folk who want to be seen on the top deck of the team bus.