Moves to make all lettings agents belong to an ombudsman scheme do not go nearly far enough.
Leaders, one of the most respected lettings companies in the UK, is calling on the Government to go further. It says the industry needs formal regulation, to protect landlords and tenants from bad practice by incompetent or unscrupulous agents.
The Government this month rejected an amendment by the Lords, by proposing an amendment of its own to the Enterprise and Regulatory Reform Bill.
The Lords amendment would have seen all letting agents being recognised, in law, by the Estate Agents Act. The watered-down government amendment means that secondary legislation could now be brought in to ensure all lettings agents belong to a government approved redress scheme.
Leaders managing director Paul Weller said: “Whilst we welcome the fact that, at last, landlords and tenants will be given a route of redress when they are let down by a letting agent, it is clear that this proposal does not tackle the problem of incompetent or unscrupulous letting agents being allowed to operate in the first place.”
He said that under current legislation anybody can set up as a letting agent, even if they have no experience, qualifications, knowledge of the law or client money protection. There are now 4.7 million households in the UK’s private rented sector and complaints about letting agents to the Property Ombudsman have more than doubled over the last five years.
Weller said that problems include inaccurate advice, bad service, unfair fees, loss of rent and deposits, and failing to comply with letting legislation. There is evidence of unscrupulous agents defrauding landlords and tenants of hundreds of thousands of pounds of rents and deposits.
Weller went on: “It’s all very well to say that landlords and tenants will now have a route of redress if they suffer at the hands of a bad letting agent, but it would obviously be far better to prevent people falling victim to bad practice in the first place by making it mandatory for letting agents to meet a minimum standard to practise.
“This would level the playing field so that good agents who train staff, comply with the law and provide a professional service, are not having to compete against ‘cowboy’ agents who do not do any of these things and as a result are able to offer unrealistically low fees to attract unwitting landlords and tenants.
“What is needed is legislation that ensures that – as a minimum requirement – all letting agents are qualified, have Client Money Protection and operate to an agreed code of conduct for the whole industry.”
He said Leaders will continue to press for more effective regulation of the industry.
Comments
Dude, as much as I'd enjoy rolling in the deep with you what you're asking is akin to asking a patient to diagnose his own illness and therein lies the problem. Lets not suffer fools and just pony up and face facts. At the very least it's a conflict of interest but even on our best day we're punching above our weight because this a job that really requires obvious independence; a true separation of duties.
Once again and for all those who missed it, no-one's questioning Rob's integrity or input into agency but I do think self regulation, especially by default is fundamentally flawed. We can't rectify this on the fly, it's too important but until matters are taken out of our hands then we'll continue on par…
Catch up with you on the next one fella!
I read the comment by dog day about Robert's CV
I don't think that even starts to scratch the surface of what he has done. I work in a firm he helped, it is really hard to put a finger on what he does or how he does it but somehow he gets others to achieve what they hadn't even considered let alone what what they had consisdered beyond them.
When he came here to sell Property management software we only did Lettings, we somehow ended up with both his software systems and we now do Estate Agency as well as lettings. In 12 years we have become best in the city for both. We have done the work but he put the idea in the partner's head.
Do you not think that what was achieved by the British Olympic Cycling team with honesty , integrity, commitment and attention to detail was all the greater because it was done in the face of those who were selfish and greedy and part of a corrupt environment where drugs and blood transfusions were the norm?
You have heard and finally understood my suggestion to improve things, so that we can be both be judged and understand your cynicism what is/are your proposal/s that justify you being so dismissive?
Government aren’t going to help other than placing a £15 /office barrier in front of all letting agents The Governing bodies have yet to release details of their contingency plans so while this is all up in the air and as this thread is going to be on the homepage till Tuesday next week how about telling is what you would do?
Oh I get it, your idea is that by all of us individually raising our game we then raise the standards within the industry and therefore effectively govern ourselves via best practice. Its either a utopian dream or a proletariat wet dream but I'll let others decide. I'm also not sure using a sport riddle with performance enhancing drugs and a history of cheating was probably the wisest choice to make your point but hey, I got it anyway.
Self governance by way of an accidental sentient industry is self governance in name only and I was under the impression we were debating something a bit more substantive so I'm going to leave that existential treat with you big man.
If your point is; how does you raising your own game affect the whole industry I am surprised you are asking that. Being better than your competition, winning more instructions and retaining clients through better service benefits who? You and your clients. What is your competition likely to do about it? Cut costs, service levels and make themselves less profitable or benchmark your improvement?
I am surprised too that you don't see how clients who have made an ill informed choice of agent in the past and lost money as a result is ultimately in the benefit of the industry. I am sure you already justify your own fee levels with basic disturbance sales techniques that point out the failings of your local competition.
You can knock the stats as much as you like but every time I hear sound bite use of the same stats to justify the latest anti-agent crusade I will point out the hollow reality of all that hype. Complaints have doubled in 5 years! 11 million Britons have been ripped off by letting agents. It is OK for those who knock agents and use the stats to bring about legislation change but you are a obviously little tired of me using those same stats to prove the industry isn’t as bad as you think it is.
The UK cycling team coach didn't focus his efforts on the forest of fat middle age blokes in lycra who insist on riding 3 abreast on Sunday morning, he identified the talented and capable individuals and tended to every micro detail of their performance. The sport of cycling is now far healthier by concentrating on a few capable riders and making them as good as they can possibly be. More bikes sold, better quality bikes sold and even more Mamils, 3 abreast on a Sunday morning.
Not on Leaders shop windows and how many times they have been smashed, the shop window in Brighton has been divided into 3 windows, on the basis it takes 3 baseball bat whacks to smash em...as this has been done so many times
Again with the stats but I would hope that you would agree that a single client losing money is one too many? Ignore the trees Rob and look at the forest...
This isn't a game show and I'm not here to challenge you I'm simply debating your stance. I'm very confident in handling client cash and I'm eager to make changes to my business to increase profits but how does that affect the industry? The whole is greater than the sum of its parts... Your sending mixed messages about what I can do for myself and what I can do for the industry and neither are relevant so lets ditch the smokescreen and focus on the subject of self governance.
You can hit me with numbers all day long but it all boils down to eyewash if you continue to ignore or you're simply unable to address the points I've raised.
Perhaps your challenge should come from within...
You can take it as arrogance if you like but the fact remains that a huge number of businesses are successfully running solid client accounts as a result.
If one wants to look at bad practice and the money lost as a result of crime, who is actually keeping track of the numbers? Add up all the cash that gets misappropriated each year by the likes of Hussain and Weston and compare it to the total annual rent roll, the percentage loss is tiny. The CMP levy payable to NFOPP has fallen on consecutive years, combine that with reported falling membership numbers means the payout pot for claims is about £3,000,000; about 0.01% of the rent roll. I might be wrong for not being overly concerned about the performance of the industry and the public perception but if we as a group do not look for something positive we may as well start complaining to the various ombudsmen about ourselves.
I really don’t understand the implied sentiment that while you happy to be trusted with Clients cash you don’t seem confident to make changes to your own business or industry that will affect your future profits and livelihoods.
As for questioning why I think self regulation is a good thing, I want you to challenge me. I am not going to answer on here because it diminishes the commercial advantage you or anyone else who asks me will get. This is another opportunity to call me arrogant, I’m not, I am just trying to give you or your competition some confidence in my ability to drive the benefits of change in your /their direction.
Kind of hard to put words into the mouth of the verbose, nice cv though…
Rob, I don’t doubt your experience and contribution to the industry has been positive but that doesn’t mean I shouldn’t be able to question your love for self-regulation, or is that what you’re actually saying?
I don’t dispute your statistics either but the mere fact that they exist shows that we have issues to address. We should look to those affected by bad practice including clients who have lost thousands of pounds and not try to diminish the severity of this simply by crunching the numbers.
I sincerely doubt we have even earned the respect let alone the right to govern so to believe that ‘we do not need to change very much at all’ based on your input and software in the industry is a tad arrogant.
By all means take pride in your work but this is exactly the type of subjective bias inherent in self-regulation that’s unavoidable. Its not easy having to grade yourself with pride at stake is it?
We both agree that change is needed but if we’re the ones making the mistakes then how can we be trusted to fix them?
Please slow down and type a sentance Richard.
The is all good progress to better regulation in this industry. It http://www.estateagentderby.co.uk/
Funny regarding Leaders unnecessary renewal fees, they do charge for everything, the Brighton headquarters which is a mere 100 metres from where the initially started has had the front windows broken more times than any other shop in the street of other letting and estate agents.
Strangely, it's the only one displaying a "smile" your be filmed sign in the front window.
Don't put too may words in my mouth by way of your interpretation of my posts I am outspoken enough without any help.
I am pleased that you think my post is inspirational, that is not normally the reception I receive when I discuss the need for change or challenge the consensus.
If you look at what I have done since 1994 and give me due credit for the influence I have directly had on close to 50% of all lettings/ PM agencies and far more indirectly influenced by competitors benchmarking my systems you will understand the confidence I have in my ability to impose best practice without regulation. My Generation 5 project is a co-operative of the best companies who I have had the pleasure of working with at various times since 1994, each is a specialist in their individual area and are notable for their honesty, integrity and standing within the Profession. Essentially it is the full skill set required to drive change once both the need and benefits of change have been accepted.
I disagree that we need to change very much at all, despite the sound-bite claims of rogue Agents and rising levels of complaints. Adding all the complaints made to OFT, Shelter, Which, TPO et all, the total level of complaints is less than 8000 out of 3.6 million private tenancies. The total number of complaints upheld by both main ombudsmen schemes last year was just short of 1500! Personally I think such a low level of complaints in such a pressured and emotive industry is something to be proud of and I certainly take a personal pride in the part I have played in establishing such a creditable level of self regulation and professional discipline.
Come come Mr May haven't the 'powers' that be had enough time to at least even lay the foundation for self governance. With that said just how do you believe such regulation could be enforced without the help of proper legislation?
By your own words both RICS and NFOPP are catatonic waiting on a inevitable realisation to wake them up but yet this is whom you would propose govern the rest of us?
Earlier you admonished 'regulating stakeholders' for good reason so I'm a little surprised by your confidence in self governance. These guys regularly present a staggering lack of vision or understanding of the industry and display bi-polar singularity in prioritising the competition for membership funds and the latest soundbite. How on earth do you expect them to come together for the benefit of the greater good?
Your talk of 'raising standards from within' is inspirational but it fails to address the fact our standards require attention right now. At least to look at their own members with a view for improvement would be a laudable but sadly everyone appears content with just having a sticker on the door. Raising standards isn't part of evolution, its man made. Evolution brings about change in order to exist and we've already shown there's levels of existence we're willing to tolerate. We need to terraform the industry!
Hello Sanjay
You said "There are far too many inexperienced and irresponsible agents who are in residential lettings for a quick buck."
Knowing full well I will not be popular for having an opinion that does not quite fit with everyone's agenda I will agree with the sentiment but explain why it is a failure of Governance that is the cause.
In a self regulated Industry where no-one is required to have qualification and there is no legal requirement to be part of a professional trade body it is inevitable that there will be Entrepreneurial types wanting to and having every legal right to make a profit from a market with high demand and restricted supply. It is also obvious that selling agents faced with a 50% reduction in transactions will look for alternative income streams similar to their existing skill set. With no guidance or regulation to dictate otherwise it is obvious that some won’t do the work to the level and at the expense we impose on ourselves.
If there are no barriers to entry into the industry and one wants /needs to control the competition because it is affecting one’s income or the reputation of the industry it is down to those seeking to control the competition to bring them [the competition] on board with the standards/consumer protection agenda. If the competition does not need to be regulated it should be given reasons to want to be regulated, at present there are no compelling reasons why they would.
The failure of governance, as I see it, is not one of having the wrong set of objectives and principles but the way they are going about managing change within the industry and society. Currently the governing trade bodies are somewhere between the denial stage and angry stage of change management. Only when they [RICS and NFOPP] accept that the increased competition is here to stay and government will not control the competition for them will they start to work out strategies for dealing with your / their inexperienced and irresponsible competition.
We welcome any move to help maximise the credibility of our industry as any professional agent should. There are far too many inexperienced and irresponsible agents who are in residential lettings for a quick buck.
Thank you.
It is very difficult to get a message across to anyone if one does not have a public presence so I have some sympathy for those who have to be the Public front of an organisation, knowing full well that the message isn't always going to be a popular one.
There is no doubt that change is going to happen and part of my role for a great number of years was to predict changes to the lettings and management industry in order to deliver appropriate solutions when the industry was ready to change. So far I have got it just right on most occasions.
My own view on regulation is that it will and should come from within. Raising standards is a natural and logical part evolution. The old saying says one can not strengthen the weak by weakening the strong and so it is with our Industry.
The RICS code of conduct ought to be the benchmark everyone tries to achieve, as I said already it is better founded that in many respects than the NFOPP code. The problems the industry is facing now does not just come from non affiliated Agencies who do not need to comply with any code of practice.
Providing redress schemes and making client money protection insurance available to those who most need it might be great short term for the general public and provide positive PR but it is simply providing a life support system to Agents that would otherwise not survive.
As part of my Generation 5 project I am looking to provide an ombudsman service that is suited to good agency and priced accordingly. The aim is to provide a redress scheme to Agents whose practice and complaints procedures are robust enough to ensure that redress is only warranted in the rarest of circumstances.
@Robert May Apologies I mistakenly took you to be a representative of RICS. I have no particular axe to grind against any of the professional letting bodies but it is becoming rather tiresome watching them all jostle for position on the political and public stage. All taking the high moral ground when feed back from their actual members appear to portray a "do as I say not as I do attutude ".
I am fully supportive of legislation in the Industry but it should come from the legislative powers of Government not from self appointed bodies who appear, internally, not to practice what they preach.
Leaders is a private equity play, not interested in customers other than for the fee’s that they pay, maximising investor returns is the number 1 priority. Having recently acquired Jordan’s in Manchester this will only add the pressure on investor returns. Jordan’s is a fee hungry business that has onerous landlord contracts in place, making it very difficult for dissatisfied customers to leave; perfect for a private equity investment!
The sweet-spot for landlords are agents with between 400 and 1000 managed properties. This gives enough scale to deliver a sound service and the businesses are still small enough to care…….
Consolidators are great for smaller firms who want to exit and also provide a healthy hunting ground for smaller firms who want to stay independent and grow. Long may the Leaders of our market place continue to operate their model.
Is it regulation you are opposed to or just the RICS?
Given the tone of your post you sound like the sort of person who hasn’t got a clue why regulation would benefit the business principals as much, if not more than, it would clients.
If you are referring to the extension on my House that I have been building since November, the building inspector was here only yesterday and he was happy that my house is in order. In fact he commented that I am doing a better job than most builders.
If, as I suspect, you think I am part of RICS I am not. I merely said that RICS Rule 8 would make a good benchmark for industry wide client cash accounting rules.
Since resigning my position at CFP Software in 2009 I work for myself as a consultant, giving assistance to Property Management and Letting firms who have unexplained problems with their Client accounts and help put those problem right. I also work with industry service suppliers, offering advice to Portals, referencing companies and software suppliers. I am also actively lobbying government independently for change to the way industry works.
My comment on this story was prompted because I don’t think Mr Weller is correct; I do not think redress and CMP is enough to resolve anything very much and I do not think quoting the TPO complaints stats helps his argument. Over 4 in every 10 agencies are working to procedures I have devised and a great deal more are if one includes my competitors who have benchmarked my market dominance when devising their own software, systems and training, with that depth of knowledge I know how this industry works and where the real problems are.
I have nothing at all to gain from siding with RICS and I am not doing that but for 27 years RICS Rule 8 mirrors my own thoughts on best practice Client cash accounting.
Please take up the issues you have with RICS with them and do not muddy my fervent independence and integrity with a post that was not correct.
I will pop back for another dose of LAT later but for now I have to shelve out a Box room.
@Robert May How about getting you own house in order before trying to impose restriction on the Industry. What about all the hidden ad on rip off costs to your members which they disagree with and were never made aware of when they joined. You now even need to pay up to £500 to get your name and details in your directory.
Then there's tranparancy, which is only one way, when are you going to advise your members of your lost appeal relating to the abuse of one of your members Human Rights by expelling him for having an opinion?
I think it's more about self publicity for Leaders. Good old Paul Weller never misses any opportunity for publicity.
I have no idea who rated them as "one of the most respected..." probably themselves. They are certainly one of the most expensive and are very creative when it comes to charging fees, and very harsh in their attitude.
Mr Weller if you want to promote protection of money getting behind Custodial Schemes as all that is needed for protecting deposits would be a good starting point.
Remind me what does Leaders do with deposits?
Rule 8 of the RICS code of conduct is a good benchmark for Client Cash Accounting. It goes beyond the NFoPP (ARLA, NAEA Etc) rules by recommending separation of duties.
Separation of duties is a fundamental principle of any cash handling process and more than anything helps to reduce problems with client money. Most agency firms sensibly employ separation of duties for processing their own money through the Office Account but few, including RICS firms, bother with meaningful separation when dealing with the client account. [Separation of Duties; the person who receives the money doesn’t bank the money, the person who prepares Landlord statements doesn’t write the Cheques] If all the regulating stakeholders in the industry were to understand, adopt and enforce Rule 8. The foundation of workable self regulation would be laid; a single code of conduct for all to follow.
I would challenge the emotion created by Mr Weller’s comment about the level of complaints in the industry; from stories published on LAT earlier in the year, TPO upheld less than 1000 valid complaints against agents. Even if the figures have doubled, which I suspect is more to do with the number of Agents voluntarily registering with TPO compared with 5 years ago than a decline in the level of service, less than 1000 complaints out of 4.7 million quoted tenancies is a miniscule level of valid complaint (about 0.02%).
Before calling for greater regulation that would effectively camouflage the bad, making them indistinguishable from the good until it is too late, the regulating stakeholders of the industry would do well to consider the benefits of raising their own Agents game above the capability of the Agents they condemn.
Agency is a competition industry and although it is the obvious un-spoken motivator behind the call for regulation, it is not possible to control competition by placing easily overcome hurdles in the path of competition. Simple and relatively cheap barriers to entry are not the way to improve standards; a single let covers the cost of both redress and CMP for the whole year.
Proving through compulsory annual audit that a Client cash account has been internally reconciled (minimum fortnightly) and has operated separation of duties throughout the year [even during staff holidays and sickness} is a barrier that many agencies, regulated and unregulated, would struggle to meet. It would provide a means to identify the strong and expose the weak which is what I believe is behind the calls for regulation.
Interesting Mr Weller says some agents charge unfair fees. What about the unnecessary renewal fee that Leaders charge?
"There is evidence of unscrupulous agents defrauding landlords and tenants of hundreds of thousands of pounds of rents and deposits"
Yes there is, look at the RICS disciplinary hearings and see for yourselves.... Wait a minute RICS firms have a code of conduct, they have a redress scheme and have CMP.
Now I am confused, all that yap about this that and the other regulation but with clear evidence that all that regulation doesn't stop surveyors dipping into the client account I can't work out why Mr Weller is suggesting it as a solution.
I think this is more about trying to reduce competition than raising the game of the industry.