Ken Livingstone’s proposed not-for-profit London-wide lettings agency has been shot down in flames by the industry.
Eric Walker, managing director of London agents Bushells said: “The idea of a not-for-profit lettings agency is an interesting, but flawed concept. ‘Not for profit’ is not the same as free and will still attract charges.
“Factor in the words ‘affordable rents’ and see how many landlords will look for low fees when they can get better rents elsewhere. If the industry were just about low fees, then the cheap agents would be market leaders rather than those who actually are.
“Further, there are not many agents who are actually making a profit. Low fees are often associated with unregulated agents who can afford to be cheap because they don’t have the financial burdens of Client Money Protection Insurance, PI Insurance and costs associated with membership of regulatory bodies.
“We have been campaigning for landlords to use properly trained and regulated agents who protect tenants and landlords’ money.
“If a new service appears which undercuts professional agents as a result of the inevitable subsidies provided by the taxpayer, then standards will be affected.
“Further, it appears that some wish the demise of lettings agents in their entirety at a time of rising unemployment. Most lettings negotiators do not earn huge sums of money and work extremely long hours.
“No, the key issue if Mr Livingstone wishes to make rents more affordable is a simple one, if only in theory. Price is determined by supply and demand. More homes would reduce the shortage which has led to tenants outbidding each other to secure a property.”
Walker said that “ridiculous planning restrictions and onerous requirements” made many schemes unaffordable for developers to proceed with. He said that on one development of 22 flats, with an average value of £265,000, the local authority wanted a payment of £700,000 to pay for social housing. On top of that, the bank wanted £60,000 simply to renew its funding.
Walker said: “Times are tough. Local authorities and industry need to work together to raise standards and protect consumers, and to provide much-needed stock – not enter into a fee price war. It will not help.”
Matt Hutchinson, director of flat and house share website SpareRoom.co.uk, said: “Imagine the funding and manpower required for a not-for-profit lettings agency, not to mention the red tape.
“Ken Livingstone’s pledge is more a pipe dream than a deliverable strategy for London renters.
“However, Ken’s verbal attack has highlighted how London’s rental sector is in dire need of some level of regulation.
“While there are certainly rogue landlords, at the same time there are countless honest landlords who are solving a problem in the housing sector, namely that would-be first-time buyers simply cannot afford to get on to the property ladder.
“Any regulation in the rental sector needs to support honest landlords as well as aiding tenants.”
Tim Hyatt, president of ARLA and head of lettings at Knight Frank, said he would welcome the opportunity to have discussions with Ken Livingstone. He said many agents had been working hard to raise industry standards and consumer awareness, adding: “Perhaps Mr Livingstone can help us raise standards even further.”
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