Friday, 19 July 2013

Time to drive out ‘cowboy’ letting agents

I chair the all-party Communities and Local Government Committee in the House of Commons. We’ve been researching and reviewing what has been happening in the private rented housing sector and we’ve now published our report and recommendations for action.

The first thing we all agreed was that action must be taken to tackle sharp practice and abuse by letting agents.

Amazingly letting agents are subject to less control than estate agents. This lack of regulation is giving rise to sharp practice and abuse by some letting agents. We were told that the letting sector was the property industry’s ‘Wild West’. ’Cowboy’ agents who rip off landlords and tenants have to be stopped. They need to play by new rules or get out of the sector.

We say that regulation for letting agents must, at the very least, be brought up to the level of that for estate agents. This would give the Office of Fair Trading the power to ban agents who act improperly. It would also put in place new rules to ensure the safe treatment of landlords’ and tenants’ money.

Secondly, we demanded that action be taken to crack down on hidden and unreasonable fees and charges imposed by letting agents.

Agents should be required to tell tenants about fees before they start the letting process.
We confirmed that unreasonable fees and opaque charges are not confined to a few rogue agents. Many well-known high street agents are just as guilty. We say that agents must make tenants aware from the outset of the fees they intend to charge. This means that all property listings–on websites, in print or in agents’ windows–must be accompanied by a full breakdown of fees.

Thirdly, we confirmed that while the private rented sector has grown significantly in the past decade, it does not yet offer many renters what they are looking for.

In particular, the security desired by many families is not available within the private rented sector. We heard from one father whose 10 year old daughter had already had to move home seven times in her life. Letting agents should not be chasing renewal fees. Instead they should be working to ensure the length of tenancies meets the needs of both tenants and landlords.

With the sector providing homes to an increasing number of families, barriers to longer tenancies have to be removed. However, in return for offering longer tenancies, landlords should be able to evict tenants much more quickly when they fail to pay their rent. In addition, mortgage lenders should remove conditions that limit tenancies to one year.

Fourthly, we want to see renting as an attractive alternative to owner occupation.
The market has to better meet the needs of renters. Tenants and landlords need to be much better informed about their rights and responsibilities. Bad landlords should be driven out of the sector.

The legislation governing the private rented sector has evolved over many years and often in response to specific problems at a particular point in time. Far from providing clarity, the result is a bewildering regulatory framework. It should be simplified and all parties made aware of their rights and responsibilities. Tenants and landlords are often unaware of their rights and responsibilities.

So, we called for the legislation covering the private rented sector to be consolidated and made easier to understand. After this, there should be a publicity campaign to promote awareness of tenants’ and landlords’ rights and responsibilities. As part of this review, the Government should work with groups representing tenants, landlords and agents to bring forward a standard, plain language tenancy agreement on which all agreements should be based. Included within this standard agreement should be an easy-to-read fact sheet, setting out the key rights and responsibilities of the landlord and the tenant.

Fifthly, we could not avoid expressing our concern about the physical standard of much private rented property.

It is clearly unacceptable that taxpayers’ money is being used to pay housing benefit to landlords for substandard properties. We’ve called for local authorities to be given the ability to recoup housing benefit payments when a landlord is convicted of letting property below legal standards. Similarly, tenants should be able to reclaim rent paid from their own resources if their landlord is convicted.

We also think local councils must be given more freedom and flexibility to raise standards. Centrally-imposed bureaucracy and constraints on licensing schemes and enforcement should be reduced, but councils must have the power to require landlords to be part of a recognised accreditation scheme and have the flexibility to develop approaches to licensing, accreditation, and enforcement that meet the needs of their areas. There should then be heavy penalties for noncompliance.

We’ve also called on the Government to
  • end the vicious circle where, in some areas, over-inflated levels of housing benefit drive up rents, in turn increasing the housing benefit bill still further,
  • to tackle evasion of capital gains and income tax by some private landlords, and
  • come up with proposals to increase the supply of housing across all tenures of housing.

You can read our full report on The Private Rented Sector at