One of the country’s foremost letting agents has repeated his call for the Government to regulate the industry.
Paul Weller, managing director of Leaders, said it would be the best Christmas present that ministers could give tenants.
Weller warned that with good quality rented properties in the most popular areas in short supply, many tenants are not selective when it comes to the letting agents they deal with.
A recent survey by Leaders showed that almost two-thirds of tenants are unaware that letting agents are not regulated.
Weller said: “Most tenants are understandably more concerned with the features of their next home – such as its size, location and whether they can afford the rent – than with the credentials of the letting agent they will be renting through.
“As a result, their ‘dream’ home – or even just the one that ticks the most boxes at the time – could turn into a nightmare if it leads them to a bad letting agent.”
Leaders’ survey of more than 5,500 tenants found that 63% are unaware that letting agents are not regulated by the Government and less than half (42%) consider membership of a professional body to be very important when choosing their letting agent.
Weller said: “Unaware that they are not protected by the law, most tenants choose their letting agent by the properties they have to offer and do not vet them to make sure they are qualified or trustworthy. As a result, too many people end up in the hands of incompetent and unscrupulous agents.
“This can mean being ripped off by unfair fees, their deposit being lost or stolen, their rights as a tenant ignored, putting up with a poor service and a badly maintained property throughout their tenancy, and worst of all, their physical safety jeopardised if the property does not comply with gas, fire and electrical safety regulations.”
Weller said: “The best Christmas present the government can give the 3.8 million tenants, and rising, in the private rented sector is to regulate letting agents.
“This would mean that in order to legally practise, letting agents would have to follow a statutory code of conduct, have qualifications in letting and property management and have Client Money Protection and Professional Indemnity insurance in place.
“The fact that anyone can set themselves up as a letting agent, with no experience, understanding of the market or knowledge of the law, and can do what they like with their clients’ money, is totally unacceptable.
“We believe that people looking for a home to rent – whether in time for Christmas or at any time in the future – should only have to worry about finding the right property and not have to concern themselves with vetting letting agents, which should be fully regulated by the government.
“Given that 40% of letting agents are not members of a professional body, it is clear that self-regulation is not enough.
“How many more people must be let down before the Government will regulate an industry that has been crying out for such measures for decades?”
Comments
For what it's worth I completely agree with you Andy.
I am happy to fight our corner against unethical agents by relying on our good reputation. We already abide by ARLA regulations and best practice, we don't want new regualtion which will only introduce needless bureaucracy and increase overheads. Bad agents just won't bother.
There isn't even any point having this discussion until someone can demonstrate the scale of the problem and back it up with some hard facts.
Resource equals cost and will result in pressure on margins and probably price increases for customers. This at the same time when Shelter and others are shouting for a ban on tenant fees.
It seems Sue Fitzgibbon is no longer a ‘small independent’ having just sold to Countrywide.
It seems to me that people are calling for ‘light touch’ regulation, in other words regulation that does not make life over onerous. I say there is no such thing and repeat; be careful what you wish for……
@stonehenge Happy Christmas and get a life for the new year.
Added by @arniefromNewington on 2013-12-17 13:45:06
@Arnie
a small letting agent who will find it much harder to comply and stay up to date with regulation
What utter nonsense. Its harder to regulate 500 offices than just one and far harder to remain compliant and keep up with training.
It's VERY easy to keep abreast of changes - become a member of NALS, RICS, ARLA who tell you and read updates on sites such as this.
Single practice Law firms manage - so do small Doctors surgeries and accountants. To claim it's unfair in small agents is insane and exactly why something needs to be done.
Some of these small agents ignore Laws on the basis 'That's the way we have always done it and never had a problem. One of these was a firm we picked up from an administrator which after 23 years stuffed landlords to the tune of £400k.
It's an excuse from the small independents nothing more. In fact, the President of ARLA, Sue Fitzgibbon is a small independent agent.
"having the freedom to choose how they wish to run their business" does NOT include the right to avoid statute and regulation on the basis of ignorance.
----------------------------------------
Please see today's first news story regarding Sue Fitzgibbon.
Oh Dear RICS Agent is at it now...'CPR's' & 'APR's'. It's the bloomin' plural..........get rid of the damn apostrophe!!!
Industry Observer
You couldn't be more right about agents' lack of knowledge at training courses, but at least they are recognising the need to undertake training.
Those who regularly go on courses is only about 5% of the industry and the rest do little or nothing.
Andy
There is no apostrophe in 'fees' as it is the plural of fee, not the possessive of a noun where is no such meaning in this instance. The inability too, of many agents to write using correct English just appals me. Buy yourself a copy of "Eats, Shoots & Leaves" by Lynne Truss for Christmas. It has been in publication for a few years now so a Charity Shop near you might have a cheap copy.
It's like seeing potato's, tomato's etc on market stalls. It makes my teeth grind, and I don't buy from any stall that cannot use the correct grammar.
Rant over, I'll get my coat.............
Estate agents are effectively regulated by the Law which currently and expressly excludes lettings agents as well the Ombudsman.
The scaremongering is wholly unnecessary as financial products have hugely different implications. Returns, costs, APR's over many years has a profound affect
With CPR's and fee transparency then its not a huge step to regulate - what is a huge step is having the resources to enforce.
Bank regulation failed because of selling techniques, pressure on profit and failure of anyone to spot these issues until too late - even then, the banks effectively had to shop themselves.
This is very different.
No, I’m saying that regulation will result in significant consolidation, less choice for customers and probably poor service in comparison to what is available today. My argument is not barking, it is logical and based on many years’ experience. Big does not always mean good.
So going by your barking (sorry, banking) arguement and applying it to our industry, are you telling is that it is the large agents and consolidators that could potentially dis-credit legislation?
What has; "there are plenty of small one man bands who proudly display ARLA membership" got to do with regulation? Have you ever worked in a regulated sector?
Prepare to complete detailed fact finds on every landlord and tenant, regardless of whether they do business with you or not. Get ready to disclose not just your fee’s but your margins. Once a regulator starts they don’t know where to stop. You are correct about banks, and they have been heavily regulated throughout! I rest my case, regulation failed with banks……
Andy - there are plenty of small one man bands who proudly display ARLA membership.
The cost of regulation is but a few hundred quid each year and a few hours spent ensuring you keep up to date with legislation. It really isn't that difficult.
It's just an excuse. Proper auditing and compliance is not an issue. In fact, there are savings in getting off the shelf tenancy agreements and notices without expensive legal fees. Compliance also reduces complaints and pay outs.
As stated below, when ALL agents have to be members of a redress scheme, there will a lot of agents who wished they had addressed this issue earlier.
Believe it or not - joining TPOS was the best thing we ever did. No more endless table tennis complaints, no litigation or threats of the same. Just straight forward resolution.
As for Banks - it wasnt regulation - it was greed and crap management and monitoring. Poor enforcement because they we making money.
I would love to agree with regulation being the answer, however I can’t. Yes the industry has challenges, however so do most industries in the UK, many of which are heavily regulated. Regulation seems like the easy, common sense answer but me belief is that regulation will result in disaster for hundreds if not thousands of small, independent agents.
Regulated sectors in the UK do not offer great service or outstanding propositions, look no further than the UK banking sector. The solution for me lies with market forces and educated consumers. If the current industry bodies focussed on what really matters, great progress would be made.
No credible individual wants Cowboy firms, no one wants criminal activity in our sector. Equally we should avoid onerous administration and costs that will potentially drive the independents out of business, leaving the nationals with huge infrastructure’s to take full advantage.
Beware of unintended consequences. Small businesses will struggle with regulation and landlords and tenants will not be served better in the long run……
@EW
Couldn't agree more. Mind I am currently dealing with a local agent ARLA and TPO etc who has charged £108 for a basic gas safety inspection (only a boiler present) and £90 for a washing machine to be removed when the LL was paying for a brand new one plus installation (and so one would assume removal of old unit?)
@ As It Is
Apologies never meant to imply tenants should be criminalised. It is the cause that should be punished, not the effect. The offence should be offering to trade when illegal to do so. I cannot think of a better example than going to someone for medical treatment you had to pay for and who you believe competent to do the job. The doctor gets struck off, not the patient prosecuted.
@ Arnie
You should sit in on some of the courses I deliver to prvate landlords (and which agents often attend). You wouldn't believe some of the basic questions I get asked, and when it comes to the more involved, time consuming, expensive or where experience is needed, most landlords eyes glaze over.
Many I deal with have never heard of the PI side of TDP for example. Fair play they have protected etc (or so they then quickly say) but issue PI - and attach a leaflet or Scheme T&Cs?!!
Agents often are little better.
Not rocket science - don't you kid yourself, I agree it does not need to be that difficult, but if that is true why do so many make such a mess of it?
Dear Arnie
You are what is wrong with agency other than the criminal element.. Good intentions perhaps - but" Fix it myself
Ask a friend who is quite handy to fix it"
You aren't worried about insurances then? Are you qualified to judge competence?
I am stunned.
@arnie - what is unfair is the fact that some small independents who make the effort to comply and care enough about standards to keep upto date with legislation are at a commercial disadvantage from those who don't and who avoid the expenses incurred in protecting consumers.
I dealt with one such agent recently. Everything from AST to S21 and T&Cs were wrong. They weren't members of anything and staff had no clue whatsoever.
When the redress requirements kick in, they will wish they had bothered.
@Arnie
a small letting agent who will find it much harder to comply and stay up to date with regulation
What utter nonsense. Its harder to regulate 500 offices than just one and far harder to remain compliant and keep up with training.
It's VERY easy to keep abreast of changes - become a member of NALS, RICS, ARLA who tell you and read updates on sites such as this.
Single practice Law firms manage - so do small Doctors surgeries and accountants. To claim it's unfair in small agents is insane and exactly why something needs to be done.
Some of these small agents ignore Laws on the basis 'That's the way we have always done it and never had a problem. One of these was a firm we picked up from an administrator which after 23 years stuffed landlords to the tune of £400k.
It's an excuse from the small independents nothing more. In fact, the President of ARLA, Sue Fitzgibbon is a small independent agent.
"having the freedom to choose how they wish to run their business" does NOT include the right to avoid statute and regulation on the basis of ignorance.
It is no surprise that larger letting agents want regulation as it will affect them disproportionately to a small letting agent who will find it much harder to comply and stay up to date with regulation.
If my flat is leaking then I have a number of options:
Fix it myself
Ask a friend who is quite handy to fix it.
Ask someone who is employed as a plumber to fix it as a homer.
Pay a self employed plumber to fix it.
Pay a local plumbing or alltrades firm to fix it.
Pay a large national company such as British gas to fix it.
The route that I pick will depend on cost and convenience to me.
Letting out your property is just the same and regulation will effectively leave three choices:
Do it yourself
Pick a local medium sized letting agent to manage the property
Pick a large national letting agent to manage the property.
To be honest letting out a property is not rocket science and once let the amount of time required to manage a property is minnimal. Those pressing for regulation make it sound much more difficult than it actually is.
It is annoying that people such as Mr Weller are pressing an agenda for their own means and trying to stop other letting agents (especially small agents) having the freedom to choose how they wish to run their business.
Finally I would ask those pressing for regulation to explain how if letting agents are supposed to be so awful, have they have achieved a satisfation rate for letting agents of over 90% (source TPOS annual report).
In fairness all big agents suffer the same issues - usually crap pay leads to staff turnover which adds to a lack of communication.
Nevertheless, Paul's views are good ones, if not new. I also agree with EW that enforcement is the biggest challenge. The lack of prosecutions from Councils with Licensing schemes mentioned on another thread illustrates this point.
Commendable words from Mr Weller but I would encourage him to look a little closer to home. Most of our new business comes from disgruntled ex. clients of the corporate agents, his own being at the forefront.
When we ask the inherited tenants for their feedback, its never positive ranging from initial fees through to property management issues. Yes I know such feedback has to be taken with a pinch of salt but even so.
A quick check of agents fees in this part of the world shows the corporates to be the most expensive by far excepting for one major company, who, inexplicably, make no mention of fees whatsoever on their website.
I feel it is unfair to blame tenants who may find that the only property that suits their needs or budget is advertised through an un-regulated agent. Surely it is landlords who should be more discerning and not just look at the bottom line. If they were to avoid unregulated agents then tenants would not have to worry and landlords would minimise their own risks. Industry bodies must get the message across more of the pitfalls of using unregulated agents through national and T/V advertising.
First we have Harry Hill - now Paul Weller's getting in on the act.
@Industry Observer
Thank you - and Happy Christmas to you also.
I just saw this on Twitter - not massively impressed by generic headlines such as this.
http://www.rman.co.uk/latest-news/article/rogue-agents-make-600-per-cent-profit-in-secret-charges
IO
Not sure its fair to criminalize tenants for using agents which aren't licensed. Seems a tad harsh when its the agent who would be breaking the Law.
When Scotland had the deposit regs imposed on them many agents verged on bankruptcy and sold / merged / remortgaged or simply went bust leaving landlords with the bill. These landlords are also called voters and the problem in England is many times greater than north of the border.
We have seen a number of firms up for sale with glaring holes in their clients account, unregistered deposits which have accrued over several years.
How many consumers will be affected if regulation is imposed? It will be a brave Government that forces the issue.
"less than half (42%) consider membership of a professional body to be very important when choosing their letting agent."
I wonder what that figure was 5 years ago?
The problem with voluntary regulation is that tenants select on property & price safe in the belief it wont happen to them.
This is why regulation must be mandatory and properly policed as said below. If there aren't sticks it wont work.
Like this tenant fee debacle - all that panic, half of our local agents dont comply and nothing happens
Paul is spot on, however I know many fellow ARLA agents who still rip off tenants with inexcusably high fees so regulation is not the be all and end all. Parameters, which are fair (i.e. not the Shelter parameters who are against agents making profit), need to be put in place!
Paul makes a good case, however I agree with EW, unless it's enforced any regulation would be doomed to fail.
Its clear that TSO just don't have the resources as a whole. OFT don't police individual cases. In fact as far as I can see, when a tenants money is nicked its treated a 'one of those things' or at worst, over-trading
@EW
Hi and compliments of the season.
As ever you talk sense and as ever as I continually say the solutions to most problems are usually obvious, it is implementation that is the problem.
Licensing must come as England cannot for ever lag behind the other UK countries even if Scotland does become a separate one!! And when it does come it must include Landlords, either they must be licensed or they must use a licensed agent.
This I think already happens in Oz and the USA? If so what makes it so difficult to implement here - simply make it a criminal offence not to use a licensed agent if the LL themselves is not licensed and authorised so to act.
Naturally as a penalty for breaking this law the punishment is loss of property or for the agent, business.
One glaring omission from Paul's article is there is no mention of the imminent new Immigration checks. Even quality agents are going to struggle with these and make costly mistakes. What the cowboys and self managing landlords will do heaven only knows.
I broadly agree with Paul. The problem is that the scale of problems are such that full regulation would have a profound affect on the agents who have used clients money to fund their businesses through the last few years. Scotland has shown this albeit on a much smaller scale.
This was one element in the promotion of self regulation The principle being if consumers were informed of the pitfalls of using unregulated agents, then those agents would get less business. Consumer awareness has improved thanks to many organisations and bodies all working towards the same goal. ARLA, NALS, RICS, SAFEagent, TSI, OFT, Which? UKALA, Deposit Scheme providers, CAB, DCLG, Ombudsman, Insurers etc all want the same thing - increased professionalism and consumer protection.
The flaw in this and indeed full regulation is policing & enforcement. Until tenants get teeth then all the regs in the world wont help. Those in the business intent on doing wrong simply won't comply.
I see many examples of agents and landlords ignoring Laws and regulation they don't like yet tenants feel powerless to do anything often for fear of losing their home.
Yes, we need regulation but it will only work if there is someone dedicated to deal with problems and with the resources to do so.
The bottom line is that it will cost a lot of money and someone will have to pay. Sadly, it may well be the tenant by way of increased rents.
Having said that, I have been amazed at the willingness of agents in brutal competition on the High Street coming together as demonstrated by SAFEagent. In this issue we are united which, in my view, offers a great platform for change but it needs Law and enforcement to turn good intentions into good practice.