Property News

Rogue Letting Agents in the Industry

Em Morley - November 28, 2012

An increasing number of people are having to rent long-term, rather than buying a house.

This rise is a consequence of growing house prices, the widening gap between earnings, the amount needed for a deposit, and tighter criteria for mortgage lending.

Almost two thirds of 20-45 year olds are not confident that they will get onto the property ladder, says Halifax, who also names the UK as a country of renters.

However, rogue letting agents are making victims of tenants due to the lack of regulation in this industry. The Property Ombudsman received 1,338 official complaints of estate and letting agents last year. This is the highest number since the Ombudsman began 20 years ago.

Letting agents aren’t obliged by law to register with an official regulatory organisation, unlike estate agents. Bodies such as the Association of Residential Letting Agents (ARLA), the Property Ombudsman, and the National Approved Letting Scheme all ensure a quality service from their members.

Spokesperson for ARLA, Ian Potter, states that landlords and tenants can be at financial risk due to the fact that anyone can become a letting agent, with no legal requirements to obey. This threat is growing as the market expands.

Despite this, registered agents have the flexibility to charge whatever they like to tenants and landlords. In areas where there is a short supply of housing, letting agents can take advantage of those with no choice but to pay the fees.

A few years ago, Kate Insall, 36, had a terrible experience with a letting agent in Warwickshire, upon moving out of her rental accommodation

Kate thoroughly cleaned the property before she left; however she later received a letter from her agency, stating that they were bringing in professional cleaners, as they claimed she hadn’t do a good enough job.

She says: “I offered to go back and clean it again, even though I knew it was in a perfect state, but [they] wouldn’t let me into the house. We had even bought expensive new curtains. The agents wouldn’t return them and charged us for taking down the old mouldy ones.”1

Almost £200 was deducted from her deposit, and Kate could not dispute it because the agent wasn’t registered.

Rogue Letting Agents in the Industry

Rogue Letting Agents in the Industry

Landlords can also suffer through letting agents. Chantal Cooke, 42, let out her flat in Kent through a local agency. Within months, the agency had offered the tenant a new flat with a different landlord, and didn’t let Chantal know.

The agency then denied all knowledge of where the tenant’s rent was, or where they’d gone. She says: “I can only assume the other landlord was paying a higher fee, or the agent was simply so incompetent it had no idea what it was doing, and having mucked up, was not professional enough to admit it. Or was too scared, as it knew it had behaved unethically, and possibly even illegally.”

Even registered letting agencies can still practise unfairly. Carly Collins, 27, regrets using a registered agent to rent out her flat in Milton Keynes.

“The agents were useless and were either not around or unable to fix things to a high enough standard,” she claims. “I was paying the agency £80 a month, but it did very little for that.”1

The majority of agencies charge for creating a contract, and undertaking credit and reference checks. Some also charge each tenant to draft an inventory, and for checking in and out of a property.

James Campbell is Head of Property Services at Winchester White estate agents, and states that charges among agents are inconsistent and charge administration fees merely for easy money.

Winchester White has a standard charge of £250 (plus VAT) for every household, regardless of the number of tenants. Campbell explains that all paperwork is outsourced, so the company finds it unacceptable to charge tenants for this.

These policies are rare, unfortunately, as letting agents can choose their own administration fees.

Campbell adds: “When the going is good in the industry, the big companies hold all the cards. There’s more room to hide in a big company, and you’ll always get agents who try and get around the system.”1

When choosing an agency, it is important to use one that is registered with an official organisation. They should also summarise every possible cost that you may have to pay, even ones that will fall later in the agreement.

When the deposit is paid, it should be put into an approved tenancy deposit scheme (TDS) such as the Deposit Protection Service, MyDeposits, or Tenancy Deposit Scheme. These are all Government-backed systems that are open to all private landlords and letting agents.

ARLA’s Ian Potter explains why he believes that regulation should be introduced: “At the moment, letting agents can set whatever fees they like without fear of recrimination. I would advise any potential tenant or landlord to only use an agent registered with us or the Ombudsman, or both. Otherwise, they’ll have to turn to a civil court to deal with any problems.”

The Property Ombudsman’s Christopher Hamer reiterated this.

“There are about 100 pieces of legislation relating to landlord and tenant matters, but none relating to agent activity,” he says in his 2010 annual report.

Unfortunately, it does not look likely that the Government will introduce any new laws to protect against these agencies, so tenants and landlords are advised to find and maintain a trustworthy letting agent.

1 http://www.moneywise.co.uk/home-mortgage/letting/beware-rogue-letting-agents