Letting agents must be regulated, says CLG Select Committee
Letting agents could, finally, be regulated and would all be forced to have Client Money Protection insurance. This morning, a powerful cross-party group of MPs pulled no punches in calling for action to curb rogue letting agents.
The report, out today from the Communities and Local Government select committee, proposes bringing regulation for letting agents up to the level of that for estate agents.
It is the strongest call yet for regulation, and one which both this government and its successor will find hard to ignore.
Both ARLA and Which? called for the report’s proposals to be implemented as soon as possible, and the SAFEagent campaign said it welcomed the recommendation that every single letting agent should have to have CMP.
NALS said it welcomed the report “with open arms”.
The CLG committee proposals would give the Office of Fair Trading power to ban letting agents, just as it can ban estate agents. The proposals, if adopted, would also make both Client Money Protection and Professional Indemnity insurances a mandatory requirement right across the industry.
The report also hints that both sales and letting agents could at some point be required to register with an accredited industry body – and that this should be reviewed within two years. A similar hint is dropped that all landlords could be made to join a recognised body.
On letting agent fees, the committee proposes a code of practice to be launched when all letting agents are compelled to belong to an ombudsman scheme – likely to be early next year.
The code would require agents to publish a full breakdown of fees charged to tenants “alongside any property listing or advertisement, be it on a website, in a window or in print”.
The report continues: “This breakdown should not be ‘small print’, but displayed in such a way as to be immediately obvious to the potential tenant.
“The code should also require agents to explain their fees and charges to tenants before showing them around any property.
“Furthermore, the code should forbid double charging, and there should be a requirement that landlords are informed of any fees charged to tenants.
“If agents do not meet these requirements, the fees should be illegal.
“Finally, the professional bodies should make a commitment to full, upfront transparency on fees and charges a requirement of membership.”
The committee also makes it clear that it may well take further action over fees next year, and has clearly not ruled out making them illegal. The report says: “We intend to gather further information on the impact in Scotland of the decision to make fees to tenants illegal, and to return to this issue in 2014.”
Launching the report, committee chairman Clive Betts said: “Unreasonable fees and opaque charges are not confined to a few rogue agents. Many well-known high street agents are just as guilty.”
He also criticised agents for “chasing renewal fees” rather than offering longer tenancies.
These are by no means the only recommendations to be made by the committee in its long-awaited report, which has significant implications for all letting agents, all private landlords – and all tenants.
Which? called on the Government to get on with implementing the report without delay. Executive director Richard Lloyd said: “We’ve been calling for letting agents to come under the same regulations as estate agents since we uncovered an alarming lack of consumer protection and wide scale poor practice in this market.
“We hope the Government puts these plans into action as soon as possible.
“We also want the Office of Fair Trading to crack on hidden charges, so that people know what they are signing up to.”
ARLA managing director Ian Potter said: “We wholeheartedly welcome the CLG committee’s recommendations. We hope the Government will introduce meaningful regulation of the sector as soon as possible.”
NALS chief executive Isobel Thomson said: “There are too many examples of agents who close down with missing funds, only to reopen again, and we welcome with open arms the enhancement of powers to ban such agents and the proposal to make CMP and PR insurance mandatory.”
Article courtesy of Letting Agent Today