Tenants are being let down by an unregulated lettings market, with significant upfront costs, variable fees and a lack of transparency around charges. In a mystery shopping exercise of letting agents in three cities, the range and type of fees charged varied significantly; for example, administrative fees ranged from £95 to £375.
Unlike estate agents, letting agents are unregulated and under no compulsion to hold membership of an ombudsman service, leaving dissatisfied tenants with no access to redress. The Resolution Foundation is calling for greater regulation to improve transparency and create a more competitive market.
The report calls for:
- Letting agents to be brought under the Estate Agents Act (1979), thereby giving the Office of Fair Trading powers to ban agents who act improperly;
- All letting agents to become members of an ombudsman service, giving tenants the opportunity to pursue redress in cases of poor practice;
- An amendment to the code of practice of the ombudsman service to make it a requirement for agents to present landlord and tenant fees on their websites, in adverts and in all paper work in a way that is easily comparable across agents;
- Government to make use of the 2012 retendering process for the tenancy deposit protection schemes to find ways to make it easier for tenants to use their old deposits when moving in the private rented sector;
- Local authorities to extend rent deposit schemes to members of the low-to-middle income group.