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Lettings agencies to be awarded 'star ratings' in new review process

Newham council in London has published the UK’s first ever ratings scheme for letting agents, in which firms receive anything from zero to five stars published on the authority’s website.

The scheme is designed to encourage all agents to improve the service they offer tenants and landlords.

As a precursor, the council undertook an audit of every single letting agent in the borough over a two year period, known as the Fair Lettings Project.

It identified which agents have in the past unfairly failed to refund deposits, pass on rental income, charged unjustified and astronomical fees or failed to address complaints.

The audit also considered performance, compliance with the law, delivery of best practice, and customer feedback. 

The council claims that as a result of this work there has been a 44 per cent increase in the number of letting agents who are now legally compliant; one agency, McDowalls, has become the first in the borough and one of the first in the country to scrap tenant fees.

Newham has been active at policing the private rented sector. In 2013 the council became the first in the country to introduce mandatory borough-wide licensing for all private property rentals. This has resulted in over 1,200 prosecutions, and last year Newham alone was responsible for 70 per cent of all prosecutions against landlords in London. 

“We are stepping in to help protect residents from businesses and individuals who exploit extreme demand in the property market to rip off and overcharge. Our star rating system will give tenants and landlord’s greater confidence in using lettings agents, but the government must act urgently and follow our lead. Councils must be given the power to demand mandatory registration in order to properly regulate the market” says a council spokesman.

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