Communities and Local Government CommitteeSupplementary written evidence submitted by the Association of Residential Letting Agents

Communities and Local Government Committee: the Private rented sector

Thank you for allowing ARLA to give evidence to the Committee. This letter follows ARLA’s written submission and the oral evidence given to the Committee by Mark Hayward, Managing Director of the National Association of Estate Agents (NAEA). Mr Hayward promised to provide you with more information about the regulatory activities undertaken by ARLA and I hope that what is outlined below is of assistance.

It may help if I begin by providing some background information about ARLA, and about the standards expected of ARLA members. Both ARLA and the NAEA are divisions of the National Federation of Property Professionals (NFOPP). NFOPP also includes two other divisions, the National Association of Valuers and Auctioneers and the Institution of Commercial & Business Agents. Some of the regulatory information provided below only relates to ARLA members, whilst some of the information also relates to members of NAEA and members of the other divisions of NFOPP. I do hope we have differentiated the information clearly enough for your purpose.

In our written evidence we mentioned that ARLA has over 6000 individual members. In fact to be more precise ARLA has 6448 individual members made up of 3864 employee members and 2584 Principal, Partner, Director (PPD) members. PPDs are subject to more stringent standards because of their more senior position. PPDs must provide our regulation department with an annual accountant’s report and proof of professional indemnity cover. They also contribute towards our Client Money Protection (CMP) scheme. The committee may be interested to know that between March 2012–March 2013 one hundred and fifty five ARLA PPD members were terminated for failure in one or more of these areas, and some of them may have rejoined when they could prove compliance.

Landlords and tenants who use an ARLA agent can rely upon our CMP scheme to rectify losses incurred through misappropriation or insolvency. Enclosed is an up to date table of claims which reflects all of the divisions of the NFOPP. Naturally in these circumstances the member usually fails to renew their membership, but if this is not the position then we will terminate membership.

ARLA employee and PPD members are bound by our standards of conduct. If there is an allegation that these standards have been breached that the matter can be dealt with by way of a fine or caution/warning. These powers are regularly used and further information covering the last three years is available upon request. More serious cases are referred to our disciplinary tribunal. Details of 13 tribunal cases which relate to lettings are publically available from our web sites (see http://www.nfopp.co.uk/complaints/disciplinary-hearings/ or let us know if you’d like us to send you this paperwork).

One of the themes which is of interest to the Committee is transparency of letting agents’ fees. The Committee may be interested in a recent ruling by the Advertising Standards Authority (ASA) on 6 March concerning Your Move, in particular than an insufficient amount of information had been provided for the consumer to establish how a letting agent’s charges would be calculated. We understand that the ASA intends issuing guidance for letting agents and we expect this guidance to say that all lettings agents must clear what non negotiable fees are charged with letting a property, and that they should do this from the start. We also understand that the Office of Fair Trading intends issuing guidance about the Consumer Protection from Unfair Trading Regulations (2008) specifically aimed at letting agents.

I hope that the information provided underlines that ARLA is committed to raising standards across the lettings market. ARLS’s proposal for regulation of the property sector is enclosed. ARLA also strongly supports the proposed amendment to the Enterprise and Regulatory Reform Bill which would make consumer redress a compulsory requirement for all letting agents. ARLA sees this an important first step in the journey towards formal statutory regulation of the sector.

April 2013