ARLA calls for regulation to put ‘wheeler dealers’ out of business

As the sell-out ARLA annual conference opens this morning, the organisation has come up with a proposal for the mandatory regulation of the entire residential property sector.

ARLA is calling for all landlords and all types of agents to be regulated, saying that the public perception of letting agents is of “wheeler dealers” dominating the sector.

The document spells out why ARLA thinks regulation is necessary, saying that “it beggars belief” that the energy industry is regulated and yet the property sector as a whole, and the lettings industry in particular, is not. People, it says, spend less on gas than they do on rent.

It says: “The majority of letting agents are professionals, working in the interests of their clients and consumers. However, the sector is tarnished by the conduct of a minority of agents who fail to adhere to basic standards.

“Failure to protect client money, mis-advertising of properties, failure to properly maintain leased accommodation and provide a safe environment for tenants – all these issues must be addressed.”

It goes on: “ARLA believes that the best way to tackle rogue agents and promote professionalism and basic standards in the letting sector is to introduce a system of mandatory regulation for those working in the letting, sales and management of property.”

ARLA refers to its own licensing scheme for members, which it says provides the most effective protection for consumers available. However, it points out that not all agents are members: “There are many agencies that are failing consumers – and the time has come to do something about them.”

The document sets out the huge growth in the private rented sector, and the number of bodies and schemes operating within it. But it says this makes the sector complex and difficult for consumers to understand.

Instead, it suggests a system where a single industry regulator would oversee and audit “accredited” industry bodies across lettings, sales, management and landlord sectors.

All agents and all landlords would, by law, have to belong to one of these accredited bodies.

For example:

NAEA and the RICS for estate agents;

ARLA and the NAEA for sales agents;

Association of Residential Managing Agents for managing agents;

and the National Landlords Association and Residential Landlords Association for landlords.

All these accredited bodies would run their own licensing schemes, with the exception of the landlord bodies which would operate registers of landlords.

Licensing would be based on qualifications, provision of client money protection, holding of professional indemnity insurance, external auditing of client accounts, and a code of practice.

The landlord bodies would merely promote best practice, along with operating registers. However, they too would be answerable to the industry regulator, and it would be compulsory for all landlords to register.

ARLA suggests that the Property Ombudsman would be the most appropriate body to take this role of industry regulator – although the Ombudsman himself, Christopher Hamer, has always been at pains to point out that he is not a regulator, but runs a redress scheme.

ARLA also proposes that only one government department should be ultimately responsible for the property sector. It suggests the Department for Communities and Local Government.

Alan Ward, chairman of the Residential Landlords Association, said that the RLA supports regulation for agents, but that there needed to be a distinction between commercial letting agents and landlords who manage a few other properties as well as those in their own portfolios.

He said: “They may develop into commercial letting agents, but to make their operation illegal would be to stifle the development of small business.

“The report also refers to the regulation of landlords – on which it is very loose.

“Proper accreditation is required with standards for property and management – but this would only be acceptable if the system operated like building control, where independent approved inspectors (operating, for example, like FENSA and Gas Safe competent persons) are able to certify, which would allow councils to focus on enforcement.”

Article courtesy of Letting Agent Today

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