Communities and Local Government CommitteeWritten evidence submitted by Reads Davies Estate Agents & Valuers

As I understand the Communities and Local Government Committee is setting up an enquiry into the Private Rented Housing Sector, including the roles played by Landlords and Letting Agents, having been an Agent for almost 50 years I considered it my duty to comment on these and other points being considered and hope my input may be useful.

When I learnt of the proposal my prime concern was that undue credence might be given to hopefully well-intentioned people and organisations, but who do not really have a grasp on the reality of the situation, rather than to the views of experienced practitioners, or the Professional Bodies who represent us, so felt I should endeavour to make mine known.

A Licensed Member of both ARLA and NAEA, I am strongly in favour of Estate Agents being regulated to ensure they have professional competence and provide adequate safeguards for Tenants and Landlords, particularly in protecting Clients monies.

These aspects are catered for through ARLA and NAEA rules, also those of the RICS, and are endorsed by the NALS and the SAFEagent schemes, as all insist on essential cover by means of Clients Money Protection. Also, we are required to provide Auditors reports to ensure compliance with accounting regulations and are required to have a complaints procedure and redress mechanism in place, as provided by the Property Ombudsman scheme or similar, and that a minimum amount of CPD is carried out.

This compliance is naturally provided at a cost, which reputable Agents are prepared to meet, as by belonging and doing so they demonstrate their professionalism. However, this seems unfortunately often not to be properly recognised or rewarded, as many people feel Agents are all the same and instead opt for lower fees and only regret this choice when at the receiving end of poor service and advice, also more seriously and regrettably financial loss through malpractice or fraud.

Whilst licensing was provided for under the Estate Agents Act in 1979, this has as yet not been implemented, so should be without further delay to cover both aspects of the profession (sales and lettings) which currently are only licensed on a voluntary basis through the schemes introduced for members of NAEA and ARLA.

I would oppose the embargo suggested on making charges to Tenants, as introduced in Scotland in that if this were to apply it would inevitably mean a loss of income stream for Agents and so lead to increased charges for Landlords or higher rents. Fees, particularly in the case of “let only” instructions, are low, so Agents need to make additional charges to cover costs, and in any case are providing a service to Tenants, for which they should be appropriately recompensed.

Registration of Landlords is also required and those that do not employ an Agent need monitoring to ensure their compliance of regulations to safeguard Tenants, gas and electrical safety being a particular issue; also other aspects in regard to the standard of accommodation provided, health and safety requirements.

I would also advocate the setting up of training programmes for Landlords managing their own properties and the provision of information for tenants, so they are aware of their rights, also on how to live in a property, particularly in regard to the importance of adequately heating and ventilating this.

Tenants are not second class citizens, as they were previously viewed by some Landlords, who expected them to live in conditions they would not have tolerated themselves, but now often rent as a lifestyle choice, rather than out of necessity.

As a result, the standard of accommodation provided, and indeed expected, has improved enormously, and continues to do so, as Landlords and Agents realise that Tenants respond favourably to being treated fairly. This also results in their being more likely to respect their accommodation and remain in it for longer, which is good in providing stability for them, also from the Landlords or Agents perspective as creating a better relationship, resulting in fewer void periods and a resultant loss of income.

However, there are certainly poor tenants, who cause severe problems by their misuse of a property and its contents, also in failing to pay the rent, so resulting in landlords imposing restrictions on the type of tenant they are willing to accept, or in selling rather than re-letting the property, with fewer homes being available to rent as a result.

Good tenants may in effect be penalised through those who abuse the system. This can apply to those receiving Housing Benefit, as some are unable to handle their finances in a proper manner, so leading to rent arrears. Whilst I realise the reasoning behind the decision to pay this Benefit direct to the recipients, so they have more responsibility in budgeting, to avoid blatant misuse or misappropriation of these funds, which are funded by the taxpayer, payment to the Landlords or Agent would still often appear preferable.

There needs to be more sanction and appropriate penalties, including criminalisation of tenants who abuse the system, as if not their disregard for reasonable behaviour can result in the financial ruin of the landlord. It can also lead to properties failing to be properly maintained or improved, as the funds required are no longer available, and indeed the willingness to do so can be severely dented.

Tenants need to be made more aware of their obligations and that should they fail to meet these of the penalties they may incur as a result. It appears there is a minority of tenants who behave in a reckless and unacceptable way, as they have been allowed to do so with impunity, a situation that cannot continue so needs to be addressed.

Any legislation introduced must reflect a “two way street” policy by not only safeguarding tenants with unscrupulous Landlords, but also vice-versa in protecting landlords who are on the receiving end of often deliberate deception by their tenants.

Both Landlords and Agents can be perceived by some as uncaring so deservedly unpopular, but there is already sufficient legalisation in place to police their activities, although not fully implemented, and it can appear that areas of less significance, such as delay in the provision of an EPC, are sometimes monitored, whereas more important ones are neglected.

There are plenty of totally responsible Landlords and the majority of Agents, particularly those belonging to the three Professional Bodies (ARLA, NAEA and RICS) comply with regulations, as it is in their interests to do so from a professional standpoint, to retain their membership and safeguard their reputation. However, it is accepted there are a minority of Agents who fail to adhere to proper standards, some of whom can also be in league with rogue Landlords, or indeed own properties they let, and who choose not to comply with statutory or other more general responsibilities to Tenants.

It is vital to protect the private rented sector, as this has an important part to play in providing housing for those who need or prefer to rent, particularly so since the demise of local Authority accommodation and due to a lack of affordable homes available through Housing Associations. Furthermore, it helps by providing employment for those involved in various roles within the industry, including the building trades, and by creating wealth for the entrepreneurs involved, leads to enhancing the economy generally.

Letting Agents badly need to improve their status and image, so they are recognised as being professionals who provide an important service, rather than as now often being treated as scapegoats or “whipping boys”, who are only out to better themselves, which is certainly not so with the vast majority.

I should be pleased to make further comment on the points raised above, to answer any queries arising or to provide any further information required.

January 2013