The local authority which set up the first borough-wide mandatory licensing scheme of every rental property is to launch the UK’s first letting agents’ rating scheme. Effectively, it will publicly name and shame bad agents.

Newham Council’s declared aim is to protect residents and landlords from rogue agents.

The London borough’s mayor, Sir Robin Wales, and cabinet have approved plans to rate all of the borough’s letting agents from zero to five stars (where five is the best), and then publish the list in full on the council’s website.

The list will offer potential tenants and landlords all the information they need to pick the best and most professional agents.

They will also know which agents have in the past failed to refund deposits, pass on rental income, charged unjustified and astronomical fees or failed to address complaints.

The ratings are based on the results of Newham’s Fair Lettings Project, which over two years has seen all letting agents in the borough audited by the council.

The audit considered performance, compliance with the law, delivery of best practice, and customer feedback. It resulted in the award of a star rating for each agency.

The Fair Lettings Project has seen businesses up their game and 71% (109 businesses) are three stars or above, while 29% (43 agents) remain non-compliant and fall below three stars.

Once the star ratings are determined each agency is informed of their result and given 21 days to appeal if they think the information is wrong or out of date.

At the end of the appeal period, a table of all letting agents and their star rating will be published in full on the council’s website. Renters and landlords will be encouraged to avoid any agents rated below three stars.

The letting agents rating scheme is designed to run alongside Newham’s Private Rented Sector licensing scheme, which has resulted in more than 1,100 prosecutions of criminal landlords.

Sir Robin said: “The extreme demand in the private rented property sector is being exploited by some unscrupulous letting agents, who rip off landlords and tenants.

“We have seen tenants charged outrageous fees and had deposits withheld, and landlords who never see the rent that is due to them.

“The law gives us limited powers to act against these cowboys, but by scrutinising their activity, and sharing information with our residents and landlords, the ratings should see the unscrupulous agents pushed out of business, while professional and hard-working agents are rewarded.”

Newham’s borough-wide mandatory licensing scheme has since been widely copied across the country, suggesting that other local authorities will be looking closely at Newham’s approach to letting agents.