Labour hits out at letting agents' 'rip-offs'

Friday 20th July 2012

The Labour Party has come up with a policy review on private rented housing – but despite making a lot of noise about ‘unscrupulous letting agents’ and ‘rip-off charges’, it stops short of introducing licensing as a policy.

As such it has walked away from the policy it had in government, when it broadly accepted the Julie Rugg report, which proposed a registration scheme for all private landlords and mandatory licensing of letting and managing agents.

Although Labour’s policy review does not totally rule out licensing, the document – which estimates that over 4,000 managing and letting agents are entirely unregulated –  effectively lets the Rugg report continue to gather dust on the shelf.

Instead, Labour will work with the industry on developing solutions.

The policy review document, which describes the lettings market as ‘broken’, notes: “It is a peculiarity of current policy that while estate agents, who hold very little money on behalf of their clients, are regulated, letting agents who hold significant sums on behalf of landlords and tenants are not.”

It says that one barrier “is the operation of the unregulated lettings market where too many unscrupulous lettings and management agents act in their own short-term interests.

“This means that tenants and landlords do not get a fair deal and the many responsible agents are undercut and their reputation undermined.

“The majority of letting and management agents provide an important service and act responsibility, but too many others are engaged in unscrupulous practices.”

The report also notes that anyone can set up as a letting agent, with no qualifications whatsoever, and no need to conform to any requirements as to conduct or to provide safeguards. Nor are letting agents obliged to register with a redress scheme.

Nor is there anything to prevent owners of companies that have gone bust while holding client money from subsequently setting up again.

All this means that letting agents, unlike estate agents, can operate outside any legislation.

This, says the report, allows unscrupulous letting agents to flourish: “Labour believes we should take steps to stop irresponsible agents operating and end the scandal of rip-off fees.”

The report quotes from the likes of ARLA, Countrywide and the Residential Landlords Association, all of which call for regulation of agents.

However, the report ends by saying: “Labour has been listening to these calls for action as part of our policy review and we have been looking at how we could deliver real change and fairness in tough times.

“We will consider different models to improve standards and practices in the private rented sector, with the goal of creating a level playing field for the many responsible operators and basic protection for tenants and landlords.

“We intend to work in partnership with the sector to develop solutions, and will look at potential measures including a code of code of [sic] conduct with entry requirements for letting agents and compulsory business and consumer protection measures. We will consider how compliance could be monitored, for example by a regulatory body with enforcement powers.

“We also want to end the confusing, inconsistent and opaque fees and charges regime.

“We will work with the lettings industry to achieve greater transparency, clarity and accessibility of information relating to fees and charges. We want to see a regime where fees and charges are easily understandable, upfront and comparable across agents.

“We will assess the level and extent of activity that can be charged for, including the size of deposits required in proportion to rent and the level of ‘administration’ fees for basic services, such as those for swapping, renewing or editing contracts.”

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