Property Ombudsman calls for crackdown on letting agents

A 26% rise in complaints against letting agents last year has prompted the Property Ombudsman to demand that something is done urgently to protect landlords and tenants.

In 2011, there were 7,641 complaints about letting agents, compared with 4,186 for house sales agents.

Noticeably, by far the largest number of complaints against letting agents came from London and the South-East, contributing 52% of overall complaints. Most of the complaints overall, 55%,  were from landlords.

The biggest single cause of lettings complaints was complaints handling by the firm itself, followed by communications failure and deposit disputes.

Ombudsman Christopher Hamer proposed the formation of an industry council to develop and promote overall standards within the lettings industry.

He also called for all the industry bodies to ‘pull together’ and for the Estate Agents Act to be amended to take account of the lettings sector.

The council would also “seek to ensure that consumers understand why they should avoid letting agents who refuse to follow a set of industry standards, such as the TPO Code of Practice, and who do not seek out membership of recognised industry bodies such as ARLA, NALS or RICS”.

Hamer said more than 25% of the complaints concerned letting agents not registered with the Ombudsman scheme, meaning that consumers’ only redress would be to take costly legal action.

He described this as “a daunting prospect in the current economic climate”.

Hamer acknowledged that the Government has set its face against regulating letting agents. But he said a new industry council could get key messages across to consumers.

However, he added: “Getting that message across can only be achieved by the bodies pulling together so that it is made obvious to consumers which firms remain intent on operating outside of industry-approved standards.

“The Consumers, Estate Agents and Redress Act 2007 required all sales agents to register with a redress scheme.

“Since then, my office has seen a year on year improvement in standards relating to sales agents.

“If letting agents were compelled by law to register with a redress scheme, I believe that standards across the lettings industry would improve in a similar way.”

He said that letting agents should be included in the Estate Agents Act 1979 by a simple redrafting of one phrase, so that all forms of tenure were embraced. That would mean that all letting agents, like sales agents, would have to belong to a redress scheme.

By the start of this year, 11,504 sales offices were registered with TPO (an estimated 93% of the market), while 8,701 lettings offices were registered – an estimated 60% of the market.

Of the 7,641 complaints against letting agents last year that went on to be examined, the Ombudsman found in favour of the complainant in 67% of cases. This compared with a figure of 56% of sales cases where he found in favour of the complainant.

The lettings awards were also larger, in 79% of cases topping £1,000 – “indicating the greater significance of their effects”.