Housing minister Mark Prisk is finally cracking the whip to stamp out crooked letting agents who rob landlords and tenants of cash that they should safeguard.
With a last minute amendment to the Enterprise and Regulatory Reform Bill that is currently under discussion in Parliament, the industry expects a new law that will curb rogue letting agents.
The amendment demands all letting agents should sign up to an approved redress scheme that can deal with complaints and deliver compensation.
The scheme is likely to work by raising the bar of professionalism by charging joining fees and setting business control standards for letting agents that will deter amateurs from joining.
The move comes after years of landlords and tenants losing money paid in good faith as rent or deposits as some letting agents siphoned the cash they should have held in client accounts to fund their own lifestyles.
The problem was small firms with financial problems dipping in to the cash to prop up failing businesses or crooks just taking the money and disappearing.
The minister’s action is warmly approved by the lettings industry – but has triggered two questions:
- Is the new law enough to stop rogue letting agents preying on landlords and tenants?
After all, the letting industry has tried numerous in-house policing to solve the problem – from the Property Ombudsman to SafeAgent and the Association of Residential Letting Agents (ARLA).
All have proved toothless and unable to stop letting agents outside their schemes from accessing client cash.
- Who runs the approved schemes?
As all the redress schemes have failed before, doubters might wonder if they have the ability to act now. The rewards are great as players in the industry jockey for position to charge membership fees to run an approved scheme.
The minister has refused to support an amendment to the bill introduced in the House of Lords by Baroness Hayter. She wanted extra powers to control letting agents for the Office of Fair Trading, which regulates property sales.
The Property Ombudsman Christopher Hamer said: “”In discussion with the housing minister, I was aware that he fully understood that regulation of letting agents was a relevant issue.
“While full regulation is not yet on the agenda, the introduction of compulsory redress brings about a level playing field for the industry and it will mean that a consumer has access to independent dispute resolution regardless of which agent they use.”