The obligatory regulation of letting agents and the introduction of professional standards for all agents could make over £20m per year for the UK economy, according to research from the Royal Institution of Chartered Surveyors (RICS).
At present, anyone can set up as a letting agent without any appropriate qualifications or industry expertise. This can sometimes lead to landlords and tenants suffering from bad practice, which costs the wider economy millions each year.
A study by the RICS reveals that after an initial set-up cost of £45m, regulating letting agents and launching a code of practice for all agents would provide net benefits of over £20m a year.
The organisation calculates that these measures would pay for themselves within less than two-and-a-half years, by removing complex red tape and offering consumers increased levels of protection.
Although estate agents are subject to relaxed regulation, the lettings industry has remained unregulated. Now, the RICS is calling for the law to be changed to ensure that letting agents are subject to the same measures. When surveyed, 90% of consumers agree that regulation in the lettings sector is much needed.
And the issue is becoming more important to politicians, with the Labour Party and Liberal Democrats due to make it a manifesto commitment in 2015.
The Shadow Housing Minister, Jack Dromey, urges: “[We call on] the Government to regulate residential lettings and management agents and to end the confusing, inconsistent charges regime, making fees easily understandable, upfront and comparable across agents.”1
Global Residential Director at the RICS, Peter Bolton King, explains the research: “These findings demonstrate exactly why the Government needs to act, not just to safeguard the thousands of tenants and landlords who fall victim to unscrupulous practice, but also to relieve pressure on the wider economy.
“It’s encouraging that the introduction of professional standards and new compulsory regulation proposals being sought by RICS has support from other industry players and consumer groups, and has now received cross party support. But what we need now is action.
“RICS has long called for a single regulatory and redress system for letting agents, which this survey demonstrates is clearly supported by the overwhelming majority of consumers. Until this happens, we recommend that tenants use a lettings agent that is a member of a professional organisation, such as RICS.”1