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Regulation of Letting Agents Being Introduced

New guidelines are being brought in aimed at protecting tenants and property owners who use letting agencies.

The Association of Residential Letting Agents (ARLA) is introducing a licensing scheme for its UK members and a code of practice for letting agents.

A similar scheme for estate agents is being considered by The National Association of Estate Agents (NAEA) for introduction later this year.

Members of ARLA's licensed agents' scheme will have to:

  • Hold a professional qualification relating to lettings;
  • Take part in continuing professional development;
  • Have professional indemnity insurance;
  • Have plans in place to protect any money they are holding for clients;
  • Have an annual independent audit carried out on clients' funds.

Under the scheme, if an ARLA licensed agent went out of business, any money it owed to clients would be protected.

"Lettings agencies are going out of business and owing their landlord clients thousands of pounds, or even tens of thousands of pounds, in rent," said Peter Bolton-King, ARLA's chief executive. "So this offers protection to landlords in the worst-case scenario."

Deposits paid by tenants were already supposed to be protected under a government deposit protection scheme - though Mr Bolton-King said that this did not always happen.

He further commented “The support of today’s event by the attending MPs highlights the need for a scheme that stamps out bad practice and offers assurance and protection to tenants. From this point on, the consumer will now know that working with an ARLA approved agent means that they will receive the best possible advice and service.”

Ruth Lilley, head of membership and professional development at ARLA, commented further "For too long the rental sector has been seen as the black sheep of the property market, with a lack of regulation and a requirement for redress to protect the consumer when the agent's failings are to the financial detriment of that consumer".

She added the ARLA scheme would "create the gold standard for letting agents in the UK, offering consumers best-practice service and advice - as well as a commitment to the protection of their money".

It has 3,500 member offices across the UK from large multi-branch companies to smaller, single office practices.

An accreditation system is in place under the management of the National Approved Letting Scheme (NALS). This was set up 10 years ago and aimed at lettings and management agents in the private rented sector.

"This recent development will surely come as a wake-up call to anybody operating in the sector that is not part of a regulatory organisation and cannot demonstrate to the consumer that they meet industry standards in the operation of their business," said Caroline Pickering, who chairs NALS.

Date of Article: 5th May 2009

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