Home Industry News ARLA launches new licensing scheme to protect consumer interests

ARLA launches new licensing scheme to protect consumer interests

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Hundreds of thousands of pounds of consumers’ money is lost each year to unprotected, unprofessional and unethical letting agents.

In a survey by the Association of Residential Lettings Agents (ARLA), 95% of consumers revealed that they believe letting agents should be licensed and it is a shock for many to learn that there is currently no scheme in place at all.

A growing number of tenants and landlords are losing out to cowboy agents in the following ways:

* Loss of funds through a lack of client money protection
* No professional indemnity insurance in place to protect a consumer from a serious error;
* Loss of monies due to the unlicensed agency holding the funds going into administration;
* Poor advice to landlords, for example about their legally-required deposit protection responsibilities, which can result in loss of the deposit for tenants and/or a fine for landlords;
* No commitment to best practice or any form of independent redress scheme for when things go wrong.

To prevent the practices listed above, and offer assurance to consumers, ARLA is today launching a Licensing Scheme for its members, thereby establishing the highest standards for letting agents in the UK.

Housing Minister Iain Wright will be speaking at the launch of the scheme in the House of Commons, saying that the establishment of competency and qualification standards will have wide-ranging benefits for consumers

Ruth Lilley, Head of Membership and Professional Development of ARLA, said: “ARLA has lobbied the Government for 10 years to assist us in establishing higher industry standards. For too long the rental sector has been seen as the black sheep of the property market with a lack of regulation of and a requirement for redress to protect the consumer when the agent’s failings are to the financial detriment of that consumer.

“The ARLA Licensing Scheme will 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.”

As of today, all ARLA members will need to be licensed as part of their membership, which includes the following implications:

* Each individual member will hold a gold standard professional qualification relating to lettings;
* All members must undertake Continuing Professional Development
* Agents must ensure they have client money protection schemes in place to protect all tenant and landlord funds held by their office;
* All clients funds require to have an annual independent audit
* Agents must have professional indemnity insurance in place;
* Agents must sign up to an independent redress scheme;
* Agents must abide by a strict code of practice.

None of the above is compulsory for letting agents as standard at the moment.

ARLA’s sister organisation, the National Association of Estate Agents (NAEA) will follow suit with the launch of its own licensing scheme later this year.

Adam Sampson, Chief Executive of Shelter, said: “It is high time the government acted to introduce statutory licensing for all letting agents, something that Shelter has been campaigning about for some time. However, industry led best practice is a positive step in the right direction. We welcome ARLA’s new licensing scheme and it’s commitment to raising standards in the sector. “All consumers should have the right to expect a professional letting service, and have access to redress when problems arise”

Simon Gordon, Head of Communications, National Landlords Association said: We very much welcome this latest development as another push to raise standards within the private-rented sector. Letting agents are in a particular position of trust between landlords and tenants and their practices must be above reproach. The ARLA Licensing Scheme should go a long way to ensuring consumers are protected from poor letting agents and improve the image of the sector as a whole.”

Letting agent and ARLA President David McMaster commented: “As an agent, this is something I have been campaigning for for years. Having a license helps me to set my business apart from all the unscrupulous, untrained and unethical agents who I hope will one day be ousted from the market because of this scheme.”

Paul Ramsden, Deputy Chief Executive, Trading Standards Institute, commented: “The absence of Government regulation of letting agents has long been a concern for TSI. We have in the past, and continue to, call for tighter controls of this sector. In general, but even more so during these difficult times, people will leave themselves vulnerable to letting agents intent on reaping the benefits of the regulatory gap in which they operate.

“Though sometimes difficult, consumers, be they tenants or landlords, should seek out letting agents backed by bodies operating OFT-approved codes of conduct to give themselves some level of protection. Whilst it is gratifying to see this increase of self-regulation amongst some sector operators, persons will continue to fall prey to unscrupulous letting agents until such time that a compulsory and robust system of regulations is introduced.”

Richard Beamish, Chief executive of Asset Skills, the Sector Skills Council for the property industry, said: “Letting agents often suffer unfairly with their public image despite most being honest, well run businesses. We have long pushed for minimum standards in estate agency and fully support ARLA’s licensing scheme for letting agents. We believe it will go far in improving public perception of the profession.”

Richard Capie, Director of Policy and Practice, the Chartered Institute of Housing, said: “The UK housing market needs far-reaching wide-scale, holistic reform to deliver fair, affordable and flexible housing in the future. The Chartered Institute of Housing believes the Private Rented Sector is an essential part of the mix with huge potential to meet the aspirations of many people currently unable to access suitable housing. The licensing scheme represents a major step forward and will give greater confidence to tenants and housing professionals alike.”