With more people taking advantage of buy to let mortgages, new landlords need to be cautious of letting agents, as they are currently an unregulated industry. At present anyone in theory can set themselves up as a letting agent – no qualifications or experience is necessary – and without any rules or code of conduct to abide by, the door is left open for unscrupulous individuals to walk straight through.
Letting agents vary
Putting the integrity of letting agents aside, differences in what they offer and charge abound. A large variation exists in the services provided – while it is standard to advertise properties, conduct viewings and collect references, other letting agents will also take care of the property hand-over and prepare an inventory. What letting agents charge, even for the same service, can also range widely – some agents charge as little as £10 to check references, while this cost can rise to £275 elsewhere. As a result a new landlord could easily end up overpaying for less than they bargained for. However, landlords need to be cautious of letting agents that appear to be remarkably cheap, as like anything, you tend to get what you pay for – ask yourself what corners might they be cutting? While it might seem a more cost-effective option for landlords to manage their own properties – costs for advertising and letting properties are likely to be less, and you have more incentive to ensure your property is let and to appropriate tenants– this can seem quite daunting to someone new to the letting arena. The key for landlords – old and new – is to agree on paper with their letting agent exactly how much they will pay and what services they will receive for this; that way there can be no nasty surprises.
The role of trade bodies
Although letting agents may not be currently regulated, landlords are encouraged to use those which are a member of an accepted trade body such as the UK Association of Letting Agents, the Association of Residential Letting Agents, National Approved Letting Scheme or the Royal Institution of Chartered Surveyors. To be a member of one of these bodies, letting agents must have recognised qualifications, undertake continuing professional development, have insurance protecting clients’ money and against professional indemnity, and ensure that they comply with the body’s code of conduct. To improve the industry, more letting agents need to sign up to the Association of Letting Agents or similar. If however, they choose not to or tenants and landlords can’t put their confidence in these, it follows that mandatory regulation will become inevitable.
Sharing the responsibility
Although some letting agents do have a lot to answer for, they are perhaps giving a bad name to the industry. After all, letting agents should not take full responsibility for the current situation, MPs need to accept their involvement. While the Labour Party may currently be calling for a review of the policy on letting agents for private properties, letting agents campaigned for regulation of their industry during Labour’s last time in Government, but their concerns were ignored. Letting agents also feel that some of the examples chosen to represent poor practice within the industry have not been fairly presented – case studies state high fees, but do not explain the legitimate breakdown of these and the benefits to the client.
For any service it shouldn’t be too much to ask to expect certain minimum standards. The best advice to landlords is to do as much research as possible on prospective letting agents and select one that is a member of a professional body, as until mandatory regulation of the sector becomes a reality, this is the safest bet of securing a reputable agent.