Ombudsman continues to press the government to bring about legislation to regulate letting agents
In his 2012 Annual Report, The Property Ombudsman, Christopher Hamer, reiterates his call for some form of regulation of letting agents. At the very least Mr Hamer argues that all letting agents operating in the UK should be required by law to join the Ombudsman scheme.
Mr Hamer says it is important that the Government heeds the current calls from TPO, trade associations such as ARLA and RICS and consumer groups such as Which? for legislation to embrace lettings agents so they can be treated in the same way as sales agents and provide a consistency of redress for consumers.
He notes that whilst the Government want to avoid over regulation, the private rented sector has grown dramatically over the last decade with more people, including an increasing number of families with children, using it to provide a roof over their heads. As a consequence of this growth the role of letting and managing agents has also grown dramatically and is now a £1 billion per annum business, handling some £14 billion per annum of clients' money.
Whilst around 60 per cent of lettings offices in the UK have voluntarily registered with TPO and follow its lettings Code of Practice, Mr Hamer argues that unless legislation is amended to require all letting agents to adhere to a set of common standards and offer their consumers a route to free redress, tenants and landlords alike will continue to be exposed to avoidable risk if they use one of the 40 per cent who do not affiliate themselves to TPO or one of the main trade associations.
'The Government has made clear that it is looking to reduce the burden on businesses and has introduced its 'Red Tape Challenge' to de-clutter the statute books of unnecessary legislation. The Government also wishes to avoid imposing burdensome regulation on business, preferring instead that business sectors put their own houses in order.
'However, those organisations involved in the property sector, including those with a consumer advocacy role, want some form of regulation to happen but realistically legislation is the only vehicle that can bring 100 per cent of letting agents within the fold.
'Pressure for change is increasing with amendments to the Estate Agents Act 1979 (EAA) being put forward in Parliament on a number of occasions and I would caution the Government that this is an issue which simply cannot be put off any longer.'
The Property Ombudsman also highlights the forthcoming changes to existing legislation and, in particular, the amendment to the EAA which will allow 'passive intermediaries' to act outside of the requirements of that Act, yet provide an introduction service for buyers and sellers.
'The point I am concerned about here is if it says 'estate agent' on the tin, looks like an estate agent and acts like an estate agent then the consumer will assume they are dealing with an estate agent,' explains Mr Hamer.
'However, they will be unaware that, like a private sale, there is no free access to redress through TPO if a dispute arises and will be misled into a less structured environment. I assume also that such offerings will be at a price much reduced on the charges by a recognised agent. Inevitably that will attract more sellers to use those services, more buyers will therefore be innocently drawn in and overall more consumers will be involved in a transaction where the only independent redress mechanism is potentially expensive legal action.'
In 2012 the Ombudsman received 15,782 complaint enquiries, a 12% increase from 2011. Individual letting enquiries increased by 9% (to 8,334) during which consumers raised a total of 14,017 different issues. Poor service was the biggest issue of complaint (54%) while issues about letting agent fees and charges were raised in 12% of enquiries. Of those cases which went on to be investigated by the Ombudsman, 50% of issues concerned poor service whilst the percentage of fees and charges issues increased to 20%.
Enquiries relating to TPO sales agents reduced in 2012. However, overall sales enquiries increased as a result of a 41% rise in queries relating to non-TPO agents. Poor service was cited by 59% of consumers as the most common issue of complaint, a figure which increased to 68% of the issues which were formally reviewed by the Ombudsman. Enquiries relating to fees and charges made up 14% of sales issues reported, rising to 16% of the issues considered by the Ombudsman.