Action is needed to tackle "sharp practice and abuse by letting agents", according to a report from the Communities and Local Government Committee published today that proposes bringing regulation for letting agents up to the level of that for estate agents. This would give the Office of Fair Trading the power to ban agents and bring in new rules to ensure the safety of landlords’ and tenants’ money.
Clive Betts MP, Chair of the Communities and Local Government Committee, said: "Amazingly, letting agents are subject to less control than estate agents. This lack of regulation is giving rise to sharp practice and abuse. We were told that the letting sector was the property industry’s ‘Wild West’.’Cowboy’ agents who rip off landlords and tenants have to be stopped. They need to play by new rules or get out of the sector."
The Report calls for action on hidden and unreasonable fees and charges imposed by letting agents and urges that agents should be required to tell tenants about fees before they start the letting process. In addition, all property listings and advertisements should list in full the fees a tenant would have to pay.
The Committee also argues that barriers to longer tenancies should be removed. In return for offering longer tenancies, landlords should be able to evict tenants much more quickly when they fail to pay their rent.
"Too often, the security desired by many families is not available within the private rented sector," said Clive Betts. "We heard from one father whose 10 year old daughter had already had to move home seven times in her life. We have to overcome the barriers to longer tenancies. Letting agents should not be chasing renewal fees. Instead they should be working to ensure the length of tenancies meets the needs of both tenants and landlords. In addition, mortgage lenders should remove conditions that limit tenancies to one year.I want to see renting as an attractive alternative to owner occupation. The market has to better meet the needs of renters."
Caroline Kenny, executive at The UK Association of Letting Agents (UKALA) generally welcomed the report. "We’ve long thought that we need bespoke solutions to increase accountability and transparency within the lettings sector. We also echo the report’s call to make Client Money Protection insurance and Professional Indemnity Insurance mandatory for all letting agents.
"The issue of fees is more complex than generally assumed. In principle, there are some fees which agents could display on property advertisements. However, others are more complex and would need to be calculated according to individual circumstances. No two properties or households are the same, which makes it very difficult to operate a business according to standard ‘book prices’. However, it may be possible for letting agents to provide a ‘price list’ of the variable fees so that the tenant is aware of what they could be liable for in the end”.
Isobel Thomson, Chief Executive of National Approved Letting Scheme (NALS), said: "What is being proposed here is a common-sense approach to improving the consumer experience of renting and letting. There are too many examples of agents who close down with missing funds, only to reopen again and we would therefore welcome with open arms the enhancement of powers to ban such agents and the proposal to make client money protection and professional indemnity insurance mandatory."