Invent a snappy name, rent a shop and build a website – and, hey presto, you are now set up as a lettings agent. And until the Chancellor’s move to ban fees in the Autumn Statement, you could charge whatever you liked to tenants to handle the renting of a property.
Unlike many of our competitors, we welcomed the ban on lettings fees. However, we think the Government missed the point and is dealing with the effect rather than facing up to the cause of the problem. Compulsory regulation of estate agents would have solved the problem of excessive charges.
The Government announcement may be an end to the agent billing a share of charges to tenants, but the lettings agent will carry on with its business of renting out homes with few external controls. Successive governments have refused to regulate estate agency, preferring to keep barriers to entry low, ostensibly to promote competition.
Renting a home is, for most people, the single biggest monthly expenditure and yet they could be dealing with an agency run by someone with little or no experience or professional training.
Agents often look much the same on the high street and online and yet the reality is that they are often very different. Indeed, many are not what they seem. The public assume, mistakenly, that there is some kind of regulation in place. This is probably because of the confusing array of trade associations and kitemark schemes around that are frankly not fit for purpose.
At Dexters, we run the Dexters Academy to train all our staff, we are a firm of chartered surveyors and a member of the professional body, the Royal Institute of Chartered Surveyors (RICS). We are also members of the Association of Residential Lettings Agents (ARLA) and comply with the Tenancy Deposit Scheme, and the London Rental Standard. But we don’t have to belong to any of these bodies because the industry is not regulated. A lawyer or an accountancy firm would not be allowed to trade without stringent professional controls. Why should an estate agent be any different?
The lettings business is particularly vulnerable to abuse and the industry is rife with those gaining business by offering landlords cheap deals, then overcharging tenants with excessive charges.
Landlords and tenants have always shared the costs associated with setting up a tenancy and most agents charge fairly and transparently in line with industry codes of conduct. However, some agents have based their business model on tenants paying a much larger share of charges.
Whilst tenants’ deposit protection legislation has gone some way to safeguarding customers’ money, there are still numerous incidents of lettings agents misappropriating cash. It is so commonplace, it is usually not considered a crime. Companies disappear taking customers' money and then reappear in a different form.
There is regulation of this sector through licensing in most countries around the world. Is it any wonder that letting agents have a poor reputation in the UK when the Government is happy to allow rogues to operate and the public to be misled?