A national licensing scheme for lettings agents has been launched, which could be extended to become a legal requirement. The move is intended to stamp out the exploitation of tenants, including by failing to repay deposits.
But proposals to extend licensing to landlords could become a serious burden on the increased number of 'accidental landlords' who are letting out properties they cannot sell.
Obligatory
The Association of Residential Letting Agents (ARLA) is running a licensing scheme, membership of which will be obligatory for all its three and a half thousand members.
The move - which is backed by the Government - is intended to put an end to bad practices by landlords, including through tenants losing deposits. Rogue - and unprepared - landlords have also been guilty of breaches of health and safety obligations. Many agents do not hold professional indemnity insurance to protect consumers from serious errors.
Gold standard
Licences will oblige holders to have a 'gold standard' professional qualification, to ensure high standards of managerial competence. ARLA members will also have to commit themselves to continuing professional development (CPD), to keep aware of best practice and regulatory changes.
Lettings agents will be required under the licence to operate client money protection schemes to safeguard tenant and landlord funds, with all client funds independently audited on an annual basis. Agents must be covered by professional indemnity insurance and join an independent redress scheme, through which they will abide using a code of practice.
95% approval
According to ARLA, hundreds of thousands of pounds of consumers' money is lost each year to rogue letting agents. An ARLA survey found 95% approval from consumers for the licensing of letting agents.
The Association believes that problems are worsening, as more people are pushed into letting-out homes that they have been unable to sell in the market downturn and with many would-be homebuyers renting instead because of the difficulties in obtaining a mortgage.
'Black sheep'
Ruth Lilley, head of membership and professional development of ARLA, says: "ARLA has lobbied the Government for 10 years to assist us in establishing higher industry standards. For too long the rental sector has been seen as the black sheep of the property market with a lack of regulation of and a requirement for redress to protect the consumer when the agent's failings are to the financial detriment of that consumer."
The move by ARLA has been widely backed, including by housing minister Ian Wright. The existing ARLA scheme is to be adopted by its associate body, the National Association of Estate Agents, later this year and is likely to be backed in a forthcoming government green paper, due soon. However, government proposals could go much further and require all landlords, as well as all letting agents, to be licensed.
A move to licence all landlords would be welcome to the Treasury, which believes many homeowners letting-out properties are failing to pay tax on the income. But amateur landlords may argue that the burden is so great that it is not worthwhile.
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related links
- Association of Residential Letting Agents
hundreds of thousands of pounds of consumers' money is lost each year to rogue letting agents.
