Letting agency regulation in the UK is voluntary. This means that, as it stands, anyone can decide one day to set up a letting agency and rent and manage properties without having to adhere to any code of conduct or follow any rules. This opens the door to inconsistent, bad practice in the lettings sector and exposes landlords and tenants to huge risks. DANGEROUS! Compare this to the heavy regulation that surrounds Financial Services and it seems crazy that there is no regulation when dealing with such an important thing; i) landlord’s most important assets and ii) tenants homes!
The Scottish Government is in the process of preparing to implement a new scheme for the mandatory regulation and registration of letting agents in Scotland, under the Housing (Scotland) Act 2014. The draft version of the Letting Agent Code of Practice (Scotland) Regulations 2016 can be read here.
However we are still a couple of years away from this being implemented so in the meantime there remains a wide range of letting agents, operating in a range of different ways.
At Umega Lettings we are ARLA (Association of Residential Letting Agents) accredited. ARLA is the foremost professional body for letting agents. Here are 5 reasons why landlords should only use regulated letting agents (and specifically ARLA accredited agents);
– Every year tenants and landlords lose thousands of pounds and suffer distress through dealing with agents who are inexperienced and do not deal with client money in a professional manner. Landlords and tenants using an ARLA Licensed agent can be sure that they are dealing with experienced and trained professionals who understand and comply with complex legislative changes and best practice. They can also be sure that an ARLA agent complies with the professional standards of the nationally recognised professional body for letting agents and that the agent demonstrates a commitment to higher standards with the residential letting sector. The code of practice that ARLA accredited agents sign up to includes things like how tenant, landlords, staff and suppliers are treated, the types of agreements to use and processes which must be followed.
2-Legislation and Training
– Regulated letting agents must keep up to date with the latest legislation and must undertake relevant training to ensure their teams have a full knowledge and understanding of all legal and compliance surround letting properties. In order to become ARLA accredited, employees must undertake professional study and examination to ensure they are equipped to safely handle landlords’ properties and they operate in tenants best interests.
3-Membership of a redress scheme
– Regulated letting agents must be members of a redress scheme to ensure consumers are protected. For example, The Property Ombudsman (TPO) is a UK government-approved organisation which providing independent conflict resolution and raising standards of service in the residential property industry. The TPO runs a voluntary scheme approved by the Office of Fair Trading (OFT), and requires letting agents to uphold a certain code of practice which includes additional protection for the consumer beyond that required by law. TPO provides a free, fair and independent service for dealing with unresolved disputes between letting agents and consumers who are actual or potential landlords or tenants. Any client who feels that they have been unfairly disadvantaged by a TPO member can take their case to the TPO’s dispute resolution service which aims “to reach a resolution of unresolved disputes in full and final settlement”. If the complaint is proven, the TPO will act appropriately to redress the complaint – this can include seeking an apology or in some cases making a financial award.
4-Your money is protected
– Regulated letting agents must sign up to client money protection in order to ensure those agents protect rent, deposits and other client funds. Umega Lettings have are members of the SafeAgent client money protection scheme. This ensures that client money is held in a designated client account and accounts are independently inspected annually (and an accountant’s report is submitted to ARLA each year). If a SafeAgent approved letting agent was to misappropriate clients’ money, then a consumer could approach SafeAgent to recover their funds
5-Professional Indemnity Insurance
– Regulated letting agents have to have professional indemnity insurance (with the appropriate cover). Professional indemnity insurance covers businesses in case inadequate advice or services are provided to a client; professional indemnity insurance will cover legal costs and expenses in defending a claim, as we as compensating businesses for any monies required to rectifying a mistake. This should give consumers peace of mind relating to the quality of service they should expect and the level of comfort of being recompensed if the letting agent were to make a mistake during the course of their instruction.
The Private Rented Sector in the UK is growing but standards of letting agents has not kept up with this growth. Compulsory agent regulation is long overdue and should eliminate the ‘cowboys’ from the industry when it comes in (probably in 2018). In the meantime, it’s not worth the risk in taking a gamble with a letting agent; only use a regulated letting agent to ensure you, your property and your tenant are kept safe.