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Drive out 'cowboy' letting agents, say MPs

18 July 2013

The Committee publishes its report into the Private Rented Sector.

Drive out ‘cowboy’ letting agents, say MPs

Action must be taken to tackle sharp practice and abuse by letting agents, says the Communities and Local Government Committee in a Report published today.

The report proposes bringing regulation for letting agents up to the level of that for estate agents. This would give the Office of Fair Trading the power to ban agents who act improperly. It would also put in place new rules to ensure the safe treatment of landlords’ and tenants’ money.

Launching the Report, Clive Betts MP, Chair of the Communities and Local Government Committee, said:

"Amazingly letting agents are subject to less control than estate agents. This lack of regulation is giving rise to sharp practice and abuse by some letting agents. We were told that the letting sector was the property industry’s ‘Wild West’.’Cowboy’ agents who rip off landlords and tenants have to be stopped. They need to play by new rules or get out of the sector."

The Report also demands action to crack down on hidden and unreasonable fees and charges imposed by letting agents. Agents should be required to tell tenants about fees before they start the letting process. The Committee calls for all property listings and advertisements to list in full the fees a tenant would have to pay.

Clive Betts said:

"Unreasonable fees and opaque charges are not confined to a few rogue agents. Many well-known high street agents are just as guilty. Agents must make tenants aware from the outset of the fees they intend to charge. All property listings¬–on websites, in print or in agents’ windows–must be accompanied by a full breakdown of fees".

Maturing the market

The Committee found that, while the private rented sector has grown significantly in the past decade, the market is still relatively immature. It does not yet offer many renters what they are looking for. With the sector home to an increasing number of families, the Committee calls for barriers to longer tenancies to be removed. In return for offering longer tenancies, landlords should be able to evict tenants much more quickly when they fail to pay their rent.

Clive Betts said:

"Too often, the security desired by many families is not available within the private rented sector. We heard from one father whose 10 year old daughter had already had to move home seven times in her life.

We have to overcome the barriers to longer tenancies. Letting agents should not be chasing renewal fees. Instead they should be working to ensure the length of tenancies meets the needs of both tenants and landlords.  In addition, mortgage lenders should remove conditions that limit tenancies to one year."

Tenants and landlords are often unaware of their rights and responsibilities. The Committee calls for the legislation covering the private rented sector to be consolidated and made easier to understand. After this, there should be a publicity campaign to promote awareness of tenants’ and landlords’ rights and responsibilities.

As part of this review, the Report recommends that the Government work with groups representing tenants, landlords and agents to bring forward a standard, plain language tenancy agreement on which all agreements should be based.  Included within this standard agreement should be an easy-to-read fact sheet, setting out the key rights and responsibilities of the landlord and the tenant.

Clive Betts said:

"I want to see renting as an attractive alternative to owner occupation. The market has to better meet the needs of renters. Tenants and landlords need to be much better informed about their rights and responsibilities. Bad landlords should be driven out of the sector.

The legislation governing the private rented sector has evolved over many years and often in response to specific problems at a particular point in time. Far from providing clarity, the result is a bewildering regulatory framework. It should be simplified and all parties made aware of their rights and responsibilities."

Raising standards

The Committee also raises concerns about the physical standard of private rented property. It calls for local authorities to be given the ability to recoup housing benefit payments when a landlord is convicted of letting property below legal standards.  Similarly, tenants should be able to reclaim rent paid from their own resources if their landlord is convicted. 

The Report recommends that local authorities be given more freedom and flexibility to raise standards. Centrally-imposed bureaucracy and constraints on licensing schemes and enforcement should be reduced. Councils should also have the power to require landlords to be part of a recognised accreditation scheme.
Clive Betts said:

"It is unacceptable that taxpayers’ money is being used to pay housing benefit to landlords for sub-standard properties. Where this occurs and the landlord is convicted, local authorities should be able to get that money back.

Councils should be given greater flexibility to develop approaches to licensing, accreditation, and enforcement that meet the needs of their areas. There should be heavy penalties for non-compliance."

The Report’s other recommendations include calling on the Government:

  • To end the vicious circle where, in some areas, over-inflated levels of housing benefit drive up rents, in turn increasing the housing benefit bill still further [paragraph 125].
  • To promote closer working between HMRC and local authorities, to tackle evasion of capital gains and income tax [paragraph 131].
  • To revisit the Committee’s report on the Financing of New Housing Supply, and set out proposals to implement the recommendations it initially rejected, with the aim of increasing supply across all tenures of housing [paragraph 150].

The report was launched by the Chair of the Committee on the floor of the House of Commons on Thursday 18 July.