The ease with which anyone can set up a letting agency has come under renewed fire.
John Heron, of specialist lender Paragon, sharply criticised lax controls which mean that a letting agent does not even have to separate client money from business cashflow.
At yesterday’s Buy to Let Debate organised by PR firm Wriglesworth in London, Heron said: “The problem is that it’s all too easy for a rogue agent to set up shop and fleece landlords and tenants, and far too few landlords and tenants know how to avoid that.
“Without some simple compulsion on letting agents to segregate funds to impose client money protection, this is going to keep happening.
“I don’t think you need heavy regulatory structure, but I do think you need to find a way of ensuring letting agents adopt a professional approach.”
Heron and other panel members on the debate agreed that too many rogue agents and landlords can slip through the net.
The well-supported event also heard criticisms of Labour’s plans for rent caps and three-year standard tenancies.
David Whittaker, of buy-to-let mortgage specialist Mortgages for Business, said that with longer tenancies, landlords would simply up the price of their starting rents to make up for any possible losses over the next three years.
The protection of clients funds is already provided for – what’s missing is any kind of meaningful auditing in this area (unless by ARLA) so it’s still all too easy for rogue agents to get away without complying. This means they are not burdened by the same overheads which responsible, regulated agents are and they can win business from innocent clients by offering ridiculously low fees.
In the area we operate landlords and tenants would simply not want to commit for three years – they have had that option since the introduction of the AST in 1988 but it’s only of interest to less than 1% of our customers. We have far more applicants asking for short lets than longer ones, and many landlords are still deciding year on year whether to continue to let or not. If they all had to commit to a 36 month tenancy at a capped rent my guess is we would see a lot of privately owned investment properties leave the marketplace for good. Once the supply dries up, what’s going to happen to rents? I think we all know.
Good luck, it’s been nice knowing you and good bye if the communists (oops!) Labour get their way.
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