Crystal Horwood: Blog
Friday 3rd May 2013
In a recent blog on the CLG website, housing minister Mark Prisk points out that the Government is taking steps to protect landlords and tenants from what he calls ‘unscrupulous lettings agents’.
Certainly, the eleventh hour amendment to the Enterprise and Regulatory Reform Bill represents a step closer to regulating the industry, but I am not sure making all letting agents sign-up to a redress scheme alone is going to tackle those who are deemed ‘unscrupulous’.
In Prisk’s blog, he emphasises that “letting agents are already subject to laws which protect tenants” and that 60% of all letting agents already belong to a redress scheme.
However, it would be foolhardy to believe that simply enforcing all letting agents to belong to a redress scheme will be enough.
Statutorily requiring all letting agents to belong to an ombudsman scheme will not stop a small percentage being reckless with client monies.
Whilst Prisk may focus on fines, this is only going to be truly effective where the money that rightly belongs to landlords and tenants has not yet been spent or disappeared.
Unfortunately, there are far too many cases where agents go into administration taking their clients’ monies with them. Most of the time, no criminal charges are brought and very little money is released back to creditors following liquidation.
Many letting agents that go under are not pinching client money simply for fun, but because they have unpaid debts through poor business management. In these cases there is no point in fining the agent as the chances are that they will not have the money. So ordering agents to pay up or go to jail is not an example of the system working – quite the contrary.
Of course, there’s no quick answer to regulating agents, but at the very least, consumer safety needs to be enforced, with Client Money Protection and professional indemnity insurance made compulsory.
Moreover, even if the introduction of a scheme will be as easy as Prisk points out, it doesn’t look likely that there will be recourse for landlords who find out too late that their agent has not joined one of the schemes.
There needs to be much more accountability. As Malcolm Harrison pointed out in his own Landlord Today blog, there need to be serious criminal penalties for agents that arrange a letting without Client Money Protection and professional indemnity insurance both firmly in place.
* Crystal Horwood is a landlord, and managing director of Southend-based lettings and property management firm PACE
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