Communities and Local Government CommitteeWritten evidence submitted by Roy Kitchen

For consideration in your enquiry in to the Private Rental Sector, I submit the following for your consideration (from an independent letting agent, founded in 2001).

YES—Letting Agents should be Regulated!

The vast majority of letting agents are self-regulated as members of and compliant with the requirements of NALS or RICS or ARLA

Membership of one of these bodies should be imposed on all agents, including “virtual” agents and estate agents with lettings as a “side-line” (we don’t need another central regulatory or registration body).

OFT to have authority to undertake unannounced audits to ensure evidence of compliance with:

1.Member of a dispute resolution service (TPO or Ombudsman Services).

2.All client monies placed in ring-fenced client accounts with a UK bank.

3.Client account insurance at adequate levels.

4.Monthly reconciliations of client accounts.

5.Professional Indemnity Insurance.

6.Data Protection Regulations.

7.Damage Deposit Regulations.

8.The Consumer Protection from Unfair Trading Regulations 2008 (CPRs), The Business Protection from Misleading Marketing Regulations 2008 and Town and Country Planning (Control of Advertisements) Regulations 1992.

OFT to have the power to appoint independent accountants, at cost to letting agent, to audit 4 above if any irregularities suspected.

Nominal one-off charge (say £50) for each letting agent to register with OFT.

Rent Control

Totally impractical and unworkable—market forces must prevail in the setting and review of rents in this sector.

Security if Tenure for Longer Periods

Should not be regulated—the reasons that landlords are in this sector are diverse; from investors in for the long term, but still may be planning an exit on one or more properties, to “forced” landlords who cannot sell and are only in for the shortest possible time, largely dependent upon recovery of the sales market. To enforce longer fixed periods on private landlords, removing the freedom to deal with their investments as they consider suits their own interests, would substantially reduce the number of investor/landlords in the marketplace and thus reduce the housing stock available.

Abolition of Letting Agents Fees to Tenants

These should not be abolished. Responsible letting agents invest a considerable financial resource in compliance (as above), staff, training, property, computers and systems etc to provide the protection and services required to meet tenants’ needs.

These fees do need to be “fair” and fully transparent (and auditable by OFT in conjunction with the above) but left to market forces to control.

Removal of fees would lead to:

1.Reduction in the number of letting agents.

2.Reduction of the resources deployed by the remaining letting agents, principally staffing, which would be detrimental to tenants’ interests.

3.Forcing up fees charged by letting agents to landlords.

4.Which in turn would result in higher rents charged to tenants—probably at a greater cost to tenants in the longer turn.

Regulation of Private Landlords

This is needed as much as/or more than the regulation of letting agents.

All private landlords should be registered with local councils—including property details and proof of compliance with Deposit Regulations.

Those letting and managing their properties though registered letting agents should be registered via the letting agent at nil charge (such information is already available from lettings agents under HMRC Legislation and Regulations).

Landlords who let and/or manage their properties themselves should register with a local or central body at nominal cost.

Local authority to reserve:

1.The right to contact tenants (details of occupants can be sourced via council tax records) for surveys of condition and care.

2.The right of inspection at any time without landlord consent to inspect condition, care and compliance with appropriate housing and safety regulations.

In submitting these views, I look forward to a balanced and practical outcome to your review into the PRS, protecting private tenants but preserving the status quo for responsible and professional regulated letting agents who provide a valuable service to landlords and tenants in the Private Rental Sector.

January 2013

Prepared 16th July 2013