Ideally, all deposits should be held in a custodial rather than insurance-backed scheme as they are in Scotland. The deposit scheme providers would welcome this, but the law doesn’t allow this obvious answer to be imposed. In Scotland, when such a law was introduced, millions of pounds were found to be missing. Imagine the ‚Äòhole’ in the much larger English and Welsh private rented sector and you will appreciate why the Government is reluctant to change things. Landlords would lose money. Landlords are also voters.
I have wondered why, with interest rates so low, an agent needs to hold clients’ money. The truth is there is no real benefit in doing so. It is simple logic for agents to pay money which belongs to others into a custodial scheme. The only reason that the endless procession of Housing Ministers have failed to enforce this is the stark reality that many millions of pounds are not where they should be. It’s easy to blame agents as a generic pantomime villain, but the consumer unwittingly perpetuates this issue. As long as landlords continue to avoid agents which have voluntarily joined a regulatory body such as ARLA, NALS, NAEA or RICS and instead chase the cheapest fee from agents not burdened by the costs associated with such regulation, then the situation will not change.
Believe me, the vast majority of lettings agents want change through strict regulation. Those agents already have immensely high standards and detest the fact that anyone can open up as an agent and undercut us and in so doing tempt consumers into their risky, murky and unregulated world. There is no point in more rules and red tape until someone polices and enforces those regulations which are already in place. As an example, look at your local agent and see if they publish their tenant fees on their website. The corporates do, we do, regulated agents do too, but many ignore such regulations safe in the knowledge no one actually bothers to check. Some of us in the industry started a campaign, SAFEagent, to raise consumer awareness and promote consumer protection – we didn’t have to, but now with over 3000 members, no one can tell me agents don’t care. We do.
