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Crackdown On Lettings Agents As Complaints Soar

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Telegraph 16/4/14

'The Government will make it compulsory for all lettings agents to sign up to approved "redress schemes" by the end of the year. This will ensure "tenants and leaseholders have a straightforward option to hold their agents to account", housing minister Kris Hopkins said on April 15.

This comes as complaints about malpractice in the lettings sector soar, as The Telegraph has reported.

Until now lettings agents – unlike estate agents actually selling property – do not have to belong to any such scheme.

Under the Government's proposals agents will have to join one of three schemes: The Property Ombudsman, Ombudsman Services Property or The Property Redress Scheme.

A majority of lettings agents already belong to one or other of these. But the Department for Communities and Local Government reckon 40pc of lettings-only firms, or 3,000 businesses in total, do not belong. They will have to sign up by the year-end.

Separately, the Property Ombudsman's official figures also show a sharp increase in lettings-related complaints enquiries. In new data, also published on April 15, it said these had grown 22pc – and now accounted for almost twice as many enquiries as sales.


Source: Property Ombudsman, April 2014

In its analysis of complaint enquiries, the Property Ombudsman said around half related to agents' failure to communicate properly, or to issues connected with property maintenance or tenants' deposits.

The Ombudsman's office received complaints from both landlords (54pc) and tenants (45pc).

The average award the Ombudsman made in connection with lettings-related complaints was £412, and the total of awards granted in 2013 was £318,000, up from £177,000 in 2012.

If agents refuse to pay the Ombudsman's awards they can lose membership of the scheme. Earlier this month one agent, Arvin Estates, of Hounslow, greater London, was expelled from the scheme after the Ombudsman required it to repay a landlord £1,725 in rents – which it subsequently failed to do.

In connection with the case an Ombudsman officials said: "While this agent appears to have ceased trading, consumers must be warned that it has been expelled from the Ombudmsan for failings and breach of membership. Other agents should note that failure to meet their obligations to cooperate with the Ombudsman can have serious consequences for their business."

The Government's new measures would force businesses excluded from such schemes to cease trading, it is hoped.

Hidden charges

Many complaints about lettings agents concern fees and the lack of transparency around additional charges.

In February, The Telegraph warned landlords were being stung with hidden charges and inflated costs by estate agents that arranged property servicing and maintenance work through contractors.

Lettings agents typically charge a monthly fee of around 15pc of rental income to manage properties. This buys a service which includes finding tenants, drawing up rental agreements and maintaining the property.

However on top of this charge, agents were adding markups of up to 20pc to contractors’ bills to boost their profits, plus demanding a cut of up to 60pc from contractors for the work they did. These charges were not clearly disclosed to landlords.'

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