We’ve been here before. The Government promises to crack down on rogue letting agents and clean up the industry. It pledges to introduce criminal charges and protect consumers from unscrupulous landlords more interested in making money than saving lives.
And so, on Easter Sunday, when ministers announced all of these measures (and more), the statement wasn’t greeted with universal thrill. In fact, this isn’t even new legislation. This is another working group comprising representatives of letting, managing and estate agents, tenants and regulators. We might see the final proposals early in 2019, meaning that a change in the law could be some way off.
Alex McKeown is joint Lead Officer for Property and Lettings at the CTSI. Is she optimistic that the Government’s comments will lead to a root and branch overhaul of the lettings sector?
“No,” McKeown says. “The problem is huge. There needs to be more financial input into trading standards to get us trained because trading standards officers do not understand a lot of this legislation at the moment and a lot of chief officers don’t want to enforce it.”
However, she adds: “It’s a step in the right direction. The proposals for actually having a qualification for people to be a letting agent. With estate agents it’s far more regulated, you have to jump through a lot more hoops. The fact is, more and more people are renting properties and fewer people are buying, and so much money is being taken. It does need to be tightened up.”
Tackling the rogues
Under the proposals for a new mandatory code of practice and a properly-recognised qualification for letting agents, the Government says that those who fall foul of the code will be subject to criminal charges. There is talk of a new regulator to implement this including scrutiny of agents who levy unwarranted and punitive fees or carry out shoddy repairs.
Heather Wheeler, Minister for Housing and Homelessness, has said: “Most property agents take a thorough and professional approach when carrying out their business, but sadly some do not. By introducing new standards for the sector, we will clamp down on the small minority of agents who abuse the system so we can better protect tenants and leaseholders who find themselves at the end of a raw deal.”
McKeown says that the problem of rogue agents is far more widespread. “The fact is that most letting agents don’t know how to run a lettings agency. So many letting agents have no clue as to what they have to comply with. It’s worrying. In Tower Hamlets there are 500 agents and I would say that 75% of them didn’t even know what a redress scheme was.”
Andrew Coulter is also a joint Lead Officer for Property and Lettings at CTSI. Like McKeown, he welcomes the Government’s consultation and points to key issues identified, such as problems in the leasehold sector, concerns around the consumer protection regulations in relation to material information, referral fees in property sales, and the competency framework for both letting and estate agents.
“I think it’s a bit of a wait-and-see at the moment as to what comes out of these working groups that the Government is setting up,” he says. “But I think the main focus and the thing that they’ve been looking at is the potential for a single regulator. The role of the ombudsman schemes might be looked at as well. There’s a lot riding on all this. But whether it comes to fruition remains to be seen. We can but hope.”
A level playing field for lettings
Also published on Easter Sunday was the Government’s response to its consultation on the launch of Client Money Protection schemes for letting agents. Legislation will now be brought forward to introduce privately-led schemes. There will also be penalties of up to £30,000 for agents who fail to comply with the scheme.
In addition, a report issued by the Housing, Communities and Local Government Select Committee on 19 April called for a review of laws surrounding private rental standards, not least greater political leadership by councils to address low standards in the sector. The committee also wants The Law Commission to review the legislation surrounding the private rental industry. Committee chairman Clive Betts says: “Local authorities need the power to levy more substantial fines against landlords, and in the case of the most serious offenders, ultimately be able to confiscate their properties.”
David Cox, chief executive of ARLA Propertymark, says that the association, the largest professional body for letting agents, is hugely supportive of the Government’s plans to crack down on rogue agents.
“After 20 years of campaigning, the Government has finally listened to our call for proper regulation of the industry. For the last two decades, successive governments have passed significant amounts of complex legislation on landlords, none of which has been properly policed or adequately enforced. These announcements demonstrate a very sensible shift towards focusing on the root cause of the issues affecting the sector rather than trying to find legislative solutions to individual problems.
“For landlords, their rental property is usually their biggest asset after the home in which they live, and for tenants, it’s their home.
“It must be the right of every landlord and every tenant to have a letting agent who knows what they are doing, is professionally qualified and the money they entrust to their agent is protected. This is a huge step towards creating a level playing field across the industry, and we look forward to working with the Government on this.”
Consistency of enforcement
Meanwhile, the Royal Institution of Chartered Surveyors (RICS) is also in favour of the proposed changes. Mike Basquill, UK Residential Associate Director, says: “We have previously indicated our desire for government to introduce a code of conduct into the private rented sector at a Westminster level, and are in fact already participating in an industry coalition which is preparing a PRS Code (Property Redress Scheme) to be offered to the Government for adoption.
“Currently, industry regulation is piecemeal and hard to navigate. In some local authority areas with selective licensing schemes the cost of a license can vary widely between areas separated by only a few streets. Some areas also give a discount for those using accredited agents and others make no differentiation between a landlord and an accredited agent.” Basquill says.
“This is a result of governments’ track records of generating incremental measures in reaction to perceived extraordinary pressures in various parts of the PRS. Examples would be the Immigration Act checks mandated on landlords and agents with respect to incoming tenants, and the banning of letting agents’ fees.”
McKeown adds: “The legislation says that a letting agent has to comply with the Immigration Act. So by not complying with that it could be an offence under our legislation. But there are some boroughs that say they don’t agree with the Immigration Act, they think it’s discriminatory, so they’re not going to enforce it. And that is happening in quite a big way.”
In addition, there is a problem with ongoing cuts to trading standards’ budgets, as Basquill from RICS acknowledges.
“A further issue is the resourcing of enforcement in a period of local authority austerity, which has been a serious challenge for both local authority trading standards officers and the National Trading Standards Estate Agency Team,” Basquill says.
Funding public safety
It’s no secret that swingeing cuts have severely affected trading standards officers’ ability to do their work. “The teams are getting less and less and getting despondent and are thinking about not staying in trading standards,” says McKeown.
“For years, trading standards has been a dying breed and the expert knowledge is going. I know that the priority areas are changing and that’s the other thing. More and more authorities are being told they have to look at housing but they don’t have the officers to look at housing. We are constantly being cut.”
So, what has this meant for public safety? In April, a possible carbon monoxide leak at a property in Harrow left two dead and five people ill, including two children. It is believed that a faulty boiler was the cause. The property was rented. And a leaked report for the Metropolitan Police on the devastating Grenfell Tower fire, which claimed 71 lives in June 2017, said that the fire was fuelled by botched refurbishment decisions that went well beyond the use of flammable cladding panels and insulation. These included wrongly fitted cavity barriers and many missing or broken door closers.
McKeown says: “The ultimate effect of trading standards generally being cut is that we can’t deal with huge problems. When you think about the fact that trading standards deals with safety, it deals with electrical safety, it deals with underage sales of tobacco.
“The effect of trading standards being cut back is that you are going to end up with more crime. The public gets cross with us and says well, they’re committing a criminal offence and we have to say that we can’t deal with it. And they lose faith in us.
“From a lettings point of view, with all the cuts, you’re going to end up with more tenants that die. You just are. That’s the gravest thing, but here in the paper are two men who have died just because they didn’t have a carbon monoxide tester in their property.
“I’ve been into properties that are just disgusting. The electric and gas are turned off at night, there are children there, cold temperatures, dangerous electric showers. And that’s the thing. Agents go under the radar, they put up these illegal partitions, they take out the alarms, they pull out the batteries, they say it’s foreign people or lower people so it doesn’t matter.
“More money needs to be given to trading standards to enforce its legislation. It needs to be more of a priority. That is what everybody says because the only way that it can be dealt with is if we get funding.”