'The letting agency industry badly needs professionalising.'
Plans to reform letting agents could finally mean they serve their crucial purpose in the sector, says policy and practice officer David Pipe.
The letting agency industry is a sector which badly needs professionalising. At present in England there is no requirement to have any kind of specialist knowledge to practice and there is no nationally recognised code of practice that agents are expected to adhere to.
Agents can now be banned from practicing if they have been convicted of certain offences, but this is likely only to deal with the very worst offenders. However there remains a great deal of evidence to suggest that standards across the industry are highly variable and that examples of poor, but not necessarily criminal, practice are common.
More must be done and the good news is that government recognises this and is beginning to take further action. Over the bank holiday weekend the Ministry of Housing Communities and Local Government (MHCLG) released further information about their plans to regulate letting agents. In future agents will be required to obtain a nationally recognised qualification to practice, with at least one person in every organisation being required to have a higher level of qualification. In addition a new, independent regulator will also be established with powers to take action against any agents who don’t adhere to a code of practice.
These changes are really welcome, although the exact timescale for their introduction remains unclear. Agents should fulfil a vital function in a sector that is characterised by small scale, often accidental, landlords. Many of these are reliant on the services of an agent if they are to deliver a good quality service to their tenants, and so it is absolutely vital that agents can show that they are skilled and knowledgeable professionals. Mandatory qualifications, codes of practice and a regulator with the power to take meaningful action against rogue agents are all sensible measures which should help to ensure this.
At the same time the government is also taking action to ban letting agents from charging fees to tenants. This too is very welcome, although the exact details of the ban are still being worked out. A draft Tenant Fees Bill was published in November. It proposes a complete ban on fees for things like drawing up tenancy agreements and to cover the cost of reference checks, as well as limits on the size of both security and holding deposits that agents will still be allowed to ask for.
The latter seems to be the main outstanding area of debate. As part of its passage through parliament, the draft bill has recently been scrutinised by a cross-party group of MPs. Their recommendations included reducing the proposed limit on security deposits from six weeks’ rent to five, and the committee also questioned whether default fees (fees charged for things like lost keys), which will still be permitted, could be used by unscrupulous agents as a loophole.
In giving evidence to the committee our head of policy, Melanie Rees, had argued for a four week limit on security deposits as well as raising concerns about default fees. We were pleased to see our comments taken on board by the committee and hope that government will now act on their recommendations.
Once these outstanding issues have been resolved, the ban is expected to come in to force next year. Taken together with the government’s newly announced plans for regulation, it will constitute major, and much needed, change for the letting agency sector.
- For a more thorough summary of all of the government’s plans to reform the private rented sector, download our updated briefing for CIH members.