Statistics have shown that an increasingly large percentage of households are living in the private rented sector.
And that a large percentage of THAT is low to middle income households and families.
Given its increasing importance in our society, I suggested in earlier posts in this series that the private rented sector is no longer something that should be left unregulated.
To enable this to be done, I suggested there should be a rented property register where landlords are required to provide details and list the properties being rented (incidentally very similar to proposals currently being made for Wales).
Landlords, should be required to register and obtain accreditation if they want to manage their properties themselves, failing which the properties should be managed by an accredited letting agent.
There is a problem with this vision however:
The case for agent accreditation
At present there is no requirement for agent accreditation. At all. There are voluntary schemes but today a letting agent can set up with no training whatsoever.
This is a national scandal.
Letting agents hold huge amounts of other people’s money and yet are subject to no control at all (other than through voluntary schemes such as those provided by ARLA and SafeAgent).
With the result that we regularly read in the press about agents going bust after having spent money which does not belong to them, to shore up their failing businesses (or sometimes on extravagant living). Resulting in massive losses for their hapless landlords, and generally a poor service to tenants.
There are also tales of estate agents who fall foul of the estate agency regulations, closing down and setting up shop as a letting agent where they can act as they please.
Even the thousands of well meaning agents, can do untold damage through ignorance. Frequently they will economise on training when times get hard, or just consider it unnecessary.
But letting agents should not be ALLOWED to economise on training. It should be a mandatory requirement for being allowed to continue in business.
Surely government must recognise this soon and introduce compulsory letting agent regulation?
I am a solicitor and I am regulated by the solicitors regulation authority (SRA). Every year I must :
- Have my accounts audited by an authorised accountant who then has to submit a report about me to the SRA
- Obtain professional indemnity insurance that has to comply with special standards
- Contribute to a fund which is used to compensate people who have suffered loss caused by a solicitor in circumstances where the loss is not covered by insurance
- Obtain at least 12 hours CPD (continuing professional development) per year
- Apply and pay for a practising certificate annually (around £2,000 per solicitor), which will only be provided if I certify that I have obtained the required PI insurance and CPD
Not to mention the practical and academic standards we have to achieve in order to become a solicitor in the first place.
So I do know a bit about regulation and what it involves. I don’t say I like it, but it is a part of being a solicitor. Letting agents manage people’s homes. They should be subject to something similar.
Accreditation for agents
When (and I very much hope it IS when) accreditation is introduced for letting agents I would suggest it include the following:
- A qualification – lets call it an accredited letting agent (ALA) which is recognised nationally
- A requirement that all letting agent firms should be owned by ALAs or (in the case of limited companies) have a majority of directors who are ALAs
- Compulsory CDP for ALAs
- A requirement that all agencies which hold other people’s money (presumably all of them) be audited annually and a report sent to a national regulatory body
- Strict standards for holding other people’s money in a separate ring fenced account (like a solicitor’s client account)
I am sure there are things I have missed out. What else would you suggest?
Good for the industry
I think one of the big gainers of all this would be letting agents themselves. This is why ARLA has been calling for regulation for years.
It would cut out the cowboys and therefore improve the reputation of the industry – giving those who DO act with honesty and integrity the good name that they deserve.
I’ll be looking further at the whole question of landlord and agent accreditation next week