The Inside Edge
As the uncertainty over the housing market looks set to grind on for much of 2012, the lettings industry as a whole has attracted some unwanted media attention this week with news of a significant rise in the number of complaints against agencies.
In 2011, the number of enquiries received by the property ombudsman rose by 26% from 2010 to 7,641 and this has prompted calls for the whole industry to be reformed and regulated. At present, agents are not obliged to register with a redress system such as the Ombudsman, who feel that making such action compulsory will lead to a rise in standards and a reduction in complaints.
A parallel can be seen from 2007, when Estate Agents were obliged to register with the Property Ombudsman. As a result, it is widely accepted that standards have improved, although a 10% rise in complaints has also been reported for sales agents in 2011.
Ombudsman Christopher Hamer went on to express his dismay that 25% of the lettings related complaints in 2011 were against landlords and agents not registered with the redress scheme and he was therefore powerless to act.
“I am concerned that, for those consumers, they may have little alternative but to undertake potentially costly legal action to pursue their complaint, a daunting prospect in the current financial climate,” Mr Hamer declared.
He also went on to point out how rogue agents, who were unregistered with the scheme were a threat to landlords and tenants alike.
“Knowledgeable landlords already check if an agent has a separate account for client money and has signed up to a redress scheme, before allowing them to market their property,” Mr Hamer added.
“However, landlords who are new to lettings, will no doubt be attracted by lower fees and may not enquire what protection the agent can provide both them and their tenants should problems later occur,” he concluded.
Reports received throughout 2011 claimed a rise both in property rentals and the cost of renting and many agents confirmed that demand was far outstripping supply. That trend seems set to continue for 2012 and therefore the Ombudsman’s reports are a worrying development.
Ian Potter, of the Association of Residential Lettings Agents is one of many who is backing the Ombudsman’s call for a compulsory redress system.
“It was interesting to note that only 10% of those complaints merited adjudication by the Ombudsman, and it should also be noted that there were almost 900 new lettings members despite some consolidation in the industry,” Mr Potter said.
“That said, it comes as very little surprise given there is no national regulation in place to stop rogue agents setting up shop and taking advantage of what is a fragile market.”