The Public Liability Insurance Blog

Letting agents escape regulation

Small houseAn amendment to the law that would have seen letting agents regulated under the Estate Agency Act 1979 was thrown out last week, meaning that letting agents have narrowly escaped becoming a regulated and more strictly monitored trade.

The Enterprise and Regulatory Reform Bill is currently going through the process of being updated and is at the stage of “amendment ping pong” between the House of Commons and the House of Lords.

The good news for tenants and landlords alike however is that the government has acknowledged that letting agents do need to be regulated. The amendment was only thrown out as it argued that full regulation of letting and managing agents under the same laws as estate agents would impose too much of a burden on the industry which would then be shovelled on to tenants.

Problems with the housing industry

Concerns have long been raised by the housing industry that there are issues with the letting and managing side of the market, with letting agents capable of putting tenants and landlords alike through difficult legal situations and unnecessary stress due to their unregulated nature and lack of accountability. No one is claiming that all letting agents are bad news and there are plenty of well established, trusted and respected operators in this market, but a bad letting agent can cause a huge amount of trouble. At present, outside of standard consumer protection laws, there’s no major redress for a letting agent that is not acting in the best interests of its clients.

The government is still taking the concerns raised seriously and intends to use the Enterprise and Regulatory Reform Bill to tackle the issue of consumer redress in the rental sector once it is passed.

Professional bodies have welcomed the news with the National Landlords Association (NLA) praising the government’s foresight to not simply lump them in with estate agents, as the two different types of entity face different issues.

“The NLA is delighted that the Government has decided to meet the challenge of regulating letting agents head-on, rather than simply applying the standards of estate agency to a distinct sector with its own significant risks,” said NLA head of policy Chris Norris.

The NLA’s sister organisation, The UK Association of Letting Agents (UKALA) also agrees with the government’s decision to not burden the market with ill-fitting regulation. “We have long been of the opinion that a bespoke solution was needed to address the issue of accountability and transparency within the lettings sector and that a poorly devised regulatory approach could do great damage to the sector at a time when it’s growth is essential to providing a healthy housing market,” said UKALA executive Caroline Kenny. “We must not forget that the vast majority of letting agencies are small and medium sized businesses which will face greater hardship complying with additional burdens.”

A consultation with the industry will follow to decide what the best course of action in relation to regulation will be.

Have you had your fingers burnt by a letting agent, either as a tenant or a landlord? If so, tweet us the story at @YourInsuranceUK or email david.hing@towergate.co.uk if you think it will take more than 140 characters!