RICS PROPERTY

JOURNAL

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J U LY/A UG U ST 2 0 1 4 3 5

RESIDENTIALPRIVATE RENTED SECTOR

Mandated regulation would mean proper protection for tenants and landlords and an upskilled letting industry

Around half of UK

agents are regulated

by a professional

body, according to

Andrew Bulmer. The

rest are unregulated,

providing limited

consumer protection, if any, he says.

Estate agents selling houses are

covered by the Estate Agents Act 1979

but the average consumer is unlikely to

know this doesnt cover lettings. There

was a recent case of someone who was

banned from practising as an estate

agent under the Act but could continue

as a letting agent.

Legal requirements are changing soon

with the Department for Communities and

Local Government (DCLG) announcement

that all letting agents will need to belong

to a scheme of redress a very welcome

development, he believes.

However, there are already some

safeguards in place, he adds. An

important part of the existing framework

is the RICS UK Residential Property

Standards (the Blue Book). This has

been endorsed by bodies such as the

National Association of Estate Agents,

the Association of Residential Letting

Agents and the Association of Residential

Managing Agents and member firms will

be judged against it at tribunal or court.

Regionally, Bulmer says, the picture

is fragmented. Wales is investigating

mandatory registration of landlords and

agents, while compulsory registration of

landlords already exists in Scotland. The

London Borough of Newham requires all

landlords to register, with other boroughs

looking at this example.

Whats the impact?Agents are often voluntary members of

regulatory bodies, such as RICS, so can

demonstrate that they are one of the

good guys, Bulmer says. Enlightened

agents also think that trained and

qualified sta` generally work more

eaciently and make fewer mistakes.

However, he adds: Landlords and

tenants often dont understand the

di`erence in how theyre protected with

regulated or unregulated agents; for

example, regarding a scheme of redress

and client money protection. A landlords

first question to an agent is usually about

how much they charge, while tenants

usually choose the property they prefer,

not the agent that is safe; perhaps the

most compelling argument for protecting

the consumer by introducing mandatory

regulation of all letting agents.

Industry initiativesBulmer says that most landlords are

small scale; 72% own just one property.

In an e`ort to address the housing

shortage, the government stimulated

institutional investment on larger

build-to-rent developments. However, it

was concerned that the poor reputation

of the private rented sector could be a

barrier to this investment and so asked

RICS to facilitate the cross-industry

PRS Code of Practice for the lettings

industry to be published this summer.

Announcing the PRS Code in April,

Housing Minister Kris Hopkins said it

was with a view to making it statutory

to provide greater confidence for tenants

in what they can expect.

Practitioners would be judged against

the Code when in a court or tribunal,

explains Bulmer. If approved by the

Secretary of State, then irrespective of

whether or not they were a regulated firm,

the agent would need a very good reason

for not following the Code.

Other DCLG plans include a

How to Rent guide (covering the rights

and responsibilities of tenants and

landlords), improvements to the eviction

process and a family friendly agreement

for longer tenancies.

Meanwhile, the Labour party has

announced that it wants to see mandatory

longer tenancies with some form of rent

increase limitation at rent review. Industry

is awaiting the detail of the schemes but

has voiced concerns of a reduction in

supply of private rented sector homes

should institutional investors be deterred

and/or smaller landlords lose confidence

and exit the market.

Labour has also called for a ban on

letting agents fees to tenants; a move

rejected by RICS, which believes that the

more recent proposed amendment to the

Consumer Rights Bill (requiring agents to

transparently disclose their fees up front

to tenants) will provide the necessary

protection without compromising the

viability of responsible, regulated firms.

New regimeI believe that all letting agents

should belong to one of the regulatory

bodies and, importantly, achieve a basic

minimum qualification to demonstrate

they are fit to practise, says Bulmer.

Mandated regulation would mean proper

protection for tenants and landlords and

an upskilled letting industry. This would

help to drive out rogue agents, to the

betterment of consumers, landlords and

the private rented sector housing stock

in the country. R

Andrew Bulmer, RICS UK Residential Director, talks

to Les Pickford about the status of regulation in the

private rented sector and why it should be improved

Is it time for regulation?

Les Pickford is a freelance writer and editorlespickford@yahoo.co.uk

Related competencies include Leasing/letting, Conduct rules, ethics and professional practice