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Regulating the Rigsbys: the dodgy letting agents hitting the jackpot

Dry rot? Tough. You want your deposit back? No chance. Michael Pooler looks at how anyone with a phone line can become a private letting agent

June 3, 2013
7 min read

In the 1970s sitcom Rising Damp, the character of Rigsby portrays the archetypal villainous landlord. Stingy, bigoted and ever-interfering in the affairs of his suffering tenants, he was a comic creation of the time and probably not too far removed from reality. If a writer were to script a similar series depicting the experiences of people in rented accommodation today, a worthy contender for the role would have to be a letting agent.

For all the Thatcherite rhetoric of a ‘property-owning democracy’, the proportion of people living in the private rented sector has doubled over the past 20 years. It now stands at one in six households – up from 8 per cent in 1994 – or around 3.6 million people. This has led to the proliferation of around 15,000 letting agents who look after properties on behalf of landlords.

They have come in for a bruising in recent months as a number of public bodies have rounded on seemingly widespread bad practices among a ‘profession’ which, despite its impact on millions of people, is not subject to any form of regulation.

The UK’s main property watchdog, The Property Ombudsman (TPO), last year received 8,344 complaints about letting agents, more than double the 2008 total. More than half of these related to poor service, nearly a fifth were about unfair business practices, and 18 per cent concerned fees and deposits. Since TPO membership is voluntary, with only around 60 per cent of all practicing agents signed up to it or equivalent schemes, this may be just the tip of the iceberg.

Sharp end

The experience of Keren Kossow, who lives in east London, ranks at the sharp end of the scale.

‘We were living in a property with black rot under the floorboards and in the bathroom,’ she says. ‘My friend had damp all the way around her walls and a bed that was awful that nobody would bother to replace, even though we told the agent. They said, “You’re in a basement flat, that’s what happens.”

‘There was paint peeling off walls and water down the back of her wardrobe. One housemate ended up with respiratory problems. After we left the landlord couldn’t rent it out for two and-a-half years due to its state.’

Fixed-term contracts, usually of 12 months, can make it hard for people living in such conditions to break the tenancy agreement and leave due to the possibility of being pursued for the outstanding rent. Conversely, some tenants like Keren fear being forced out if they make a fuss; she hadn’t even heard of bodies such as TPO that monitor complaints.

Robert Nichols, who works at the London-wide letting agent Edmund Cude, which has 5,000 properties in its portfolio, denies such malpractices are widespread and says a small minority are the cause of the bad press. ‘In many cases, tenants will complain to the letting agent when the fault actually lies with a cash-strapped landlord who is reluctant to make repairs,’ he says.

But there is a growing trend of unscrupulous agents taking advantage of people’s ignorance of their rights, says Louise Hall, a solicitor at North Manchester Citizens Advice Bureau.

She has seen parts of the city ‘detrimentally affected’ as a result of one or two roguish agents dominating the entire local market, leaving no alternative choice for renters. Some go so far as trying to kick people out of their homes without having followed the lawful procedure.

‘We have to be on guard as to whether they will serve eviction notices properly. They don’t follow the rules properly, even though they know the law, and rely on people not getting advice. They are definitely trying it on more.’

Lost deposits

More than 40 per cent of private tenants in the past three years say they have had their deposits withheld, or large deductions made on the basis of questionable cleaning services and repairs they say they could have done more cheaply. In a house with several tenants this can easily amount to thousands of pounds and on a national level it is estimated to have cost tenants £1.1 billion in the three years to 2012.

Certainly, in some instances tenants fall into arrears or cause damage to property beyond normal wear and tear and landlords and agents are within their rights to reclaim costs. Nevertheless, most tenants are still unaware of mandatory schemes to protect deposits in the case of dispute, research by the housing charity Shelter found.

Tim Hunt was fully aware of his rights but powerless to enforce them. He and his partner were due to move into a flat in south London but when the landlady suddenly cancelled the contract, the letting agent kept their £1,000 deposit – which somehow changed into a non-refundable management fee. Unable to pay for a lawyer, his efforts got him nowhere.

He is not alone. Extortionate ‘admin’ fees average £540 per person, according to Shelter. They can include credit checks charged well above their actual cost and annual contract renewals, typically costing more than £100 and levied even when there is no change in the terms of the tenancy or improvements made to the property.

These commonplace ‘drip-feed’ charges, made after a contract has been signed, have been slammed by the Office for Fair Trading, which called for clearer tariffs. And the social consequences were highlighted by the Local Government Association (LGA), a body that represents local councils, when it said that fees were preventing many young people from getting into their own accommodation. Yet so far this has fallen on deaf governmental ears.

Letting agents and the law

As with any other trader, agents are subject to the ordinary laws of the land. They can be pulled up for offences such as fraud, harassment or failure to have a licence in the case of houses in multiple occupation. Local trading standards can investigate complaints and council housing departments can – and should – intervene when a house is not fit to live in.

However, in contrast to estate agents and social landlords, there is no compulsory code of practice, legal route of redress or professional register, making it impossible for agents to be struck off even if found guilty of repeatedly breaking the law in their work. No qualifications are required and anybody with a phone line can set up shop.

This anomaly fails to take into account the unique nature of a business that deals in people’s homes and has earned the private rented sector the moniker of the ‘wild west’ of housing.

Keen to shrug off this image, industry bodies such as the Royal Institute of Chartered Surveyors (RICS) and the Association of Residential Letting Agents (ARLA) are pushing for regulation with a statutory underpinning. The Labour Party appears to back this.

Of course, not all the ills of the private rented sector can be blamed on letting agents – plenty of properties are let directly by landlords without their involvement. However, the key difference is that while a single bad landlord may typically affect one or several households, a letting agent who doesn’t play by the rules has the potential to make thousands of people’s lives a misery.

Despite growing calls for intervention, the government has repeatedly made it clear that there will be no regulation. It claims it would create too much ‘red tape’ for businesses – placing itself firmly on the side of the modern-day Rigsbys, and expecting the rest of us to grin and bear the rising damp.

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