Why Lettings Agents should be regulated

In Leeds this week, an estates and lettings agency has simply disappeared from view, shutting up their shop, removing all computer equipment and leaving unopened post on the doormat - as well as a lot of confused and disgruntled landlords and tenants.

The Property Showroom, in Farsley, Leeds, was run by Ayrton Properties Ltd. and owned by Mark and Samantha Hamilton-Smith. No warning was given that they were closing their business, and whilst their website is still visible, nobody is picking up the phone.

Their client landlords have been left completely in the dark as to the whereabouts of their rental and deposit monies; tenants have been left with no one to contact to carry out repairs - and nowhere to pay their rent.

Only last month, a lettings agent in Oxford, Zulfiqar Hussain, trading as Charles Lawson Lettings, was sentenced to nine months in prison (suspended for two years), and ordered to pay more than £300,000 by way of a confiscation order, compensation and costs, following a guilty plea of eight offences of consumer protection and money laundering.

He had withheld rent from landlords and deposits from tenants over a sustained period of time.

These cases are further examples of how the lack of regulation in this area leads to unacceptable risk.

The Property Showroom professes to be a member of the Property Ombudsman scheme - but if they are no longer in business, any complaints or requests for compensation to that scheme will go unanswered, and if they hold no insurance over client monies both landlords and tenants could lose substantial amounts.

In the Oxford case, over sixty people had complained about losing money before Trading Standards investigated and prosecuted.

It goes without saying that a lettings agent is in a position of enormous trust, receiving large amounts of money from tenants, in terms of deposits and rental payments, which they hold on behalf of their client landlords.

When things go wrong, whether by dishonesty or financial mismanagement, innocent people stand to lose a lot of money.

The government refuses to regulate lettings agents, despite calls from those within the sector - particularly reputable agents - to do so. The Property Ombudsman called on the Government in 2010 to regulate the sector, noting that disputes involving agents had grown from 28 to 49% of his workload in the preceding year. The Rugg report published in late 2008, an extensive independent review of the private lettings sector, strongly advocated regulation of lettings agencies to drive up standards and protect both landlords and consumers.

Whilst the Government at the time supported it, no legislation followed, and current Housing Minister Grant Shapps made it clear in the early days of this government that any plans for regulation would be shelved.

So in a wholly unregulated field, how would you choose a lettings agent that not going to disappear or leave you out of pocket?

Some lettings agents are members of ARLA the Association of Residential Lettings Agents. Membership of this scheme is voluntary and it is self-regulating. They will insist on insurance protection for client monies and have standards of client care.

Or choose a solicitors lettings agency. We would say this, wouldn't we, but as solicitors we are regulated by the Solicitors Regulation Authority (SRA), and are subjected to the highest standards of client care and consumer protection, ensuring peace of mind and complete financial probity.

In the legal profession, our regulation is a statutory requirement and this extends to our estate and lettings agencies. We have complete financial transparency unlike other agencies, we take no secret commissions or payment from third parties, and our client monies are rigorously protected and audited with annual reports being sent to our regulators. We follow the highest professional standards.

Until regulation becomes a legal requirement, and there seems to be no chance of that happening any time soon, landlords must select their agent with care, based on trust, reputation, and regulation that matters.

Alistair McKinlay

Written by

Alistair McKinlay

Director & Head of Conveyancing

Alistair is a Director and Head of Conveyancing with over 20 years’ experience. He deals with a wide range of property matters, including residential sales and purchases, estate development work and commercial property transactions, acting for clients locally and nationally. Alistair has been instrumental in the...

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