Sean Hooker: How can we tackle enforcement of lettings legislation?

4 October 2021

New lettings legislation has come thick and fast over the past few years, but how well is it being enforced?

Well, isn’t it nice to get back to normal in the business world? Well, almost! Live face-to-face gatherings are back, as I discovered when I was invited to attend the recent Chartered Trading Standards Institute of Trading Standards Symposium as a guest in Birmingham. I say normal, however, if it is not one thing, it is another and my day started far earlier than anticipated to allow for finding a petrol station to fill up the car to ensure I could get there.  Not quite as bad as feared, eventually finding one with less of a queue on the third attempt.

I brought my colleague Mike Morgan with me, who has worked with me to set up our mediation service, but now also heads up my compliance team at the Property Redress Scheme. Having formerly worked for Trading Standards, a deposit scheme, and being trained in several alternative dispute resolution techniques, he was an ideal companion for the trip, as one of the main sessions was for the CTSI approved providers of alternative dispute resolution, of which we are one.

The landscape of complaints and consumer redress is changing and will continue to do so into the near future. This, however, is not what I want to share with you, as I have touched on it in my previous musings for Newsagent, although I no doubt will be revisiting the topic when the much-awaited White Paper on the Renters' Reform Bill finally emerges. No, what I want to discuss is the thorny issue of enforcement in the private rental sector.

The event was packed with practising trading standards professionals, with many more from around the country tuning in live on a virtual platform, all eager to learn about the latest scams and rip offs, finding out how to identify a fake Louis Vuitton or Rolex.

I attended a session on the powers local trading standards officers possess to enforce the regulations in place for property agents, both sales and lettings, and landlords. I was invited as a guest by National Trading Standards Estate and Letting Agents Team (NTSELAT); along with a representative of TPO and from the newly named Department of Levelling Up, Housing and Government. NTSELAT are the lead enforcement agency for the country and provide a lot of guidance and assistance to both consumers and business on compliance with the law and, in particular, the consumer protection regulations.

I speak to agents on a regular basis and without a doubt, the topic they get most heated about is all the rules and regulations they have to cope with, but also why whilst they dutifully comply, the dodgy geezer down the road, with his pop-up agency and makeshift banner, declaring an all singing and dancing service for a fraction of the price it should cost, gets away with ignoring all the laws because they know they will get away with it, because no one is policing it. (Rant over.) This is the message I wanted to get across to the very people whose job it is to hold the sector to account.

The session started with a question from NTSELAT to the packed room asking how many officers were actively enforcing the laws in place. A few hands went up. Not a great start and not a message I wanted to hear. Of course, there are various challenges national trading standards teams face in terms of resourcing and the wide areas of consumer protection they must cover, not to mention the challenges of Covid restrictions on their ability to investigate matters are clearly factors, but this was disappointing.

On further probing, it became clear that maybe the problem was a lack of understanding of the new laws and what they mean and, certainly, they have come thick and fast over the last few years and many of the officers need to catch up. This said, it is a matter of priorities, and there is some work to do to reorientate the mindset of trading standards to elevate our industry up the table of activities that could cause serious detriment to consumers.

We are all fed up with the small handful of crooks who exploit the industry and the larger minority, of poor, untrained, and incompetent operators, who tarnish the reputation of the good agents and put their customers at real risk of harm. No wonder Shelter can jump up and down with their wicked landlord and letting agent rhetoric and demand more and more punitive sanctions. The industry has to do its bit, but so do the enforcement sectors, including trading standards, environmental health, housing teams and, yes, even the police.

The session went on to ask what sort of complaints were now common and what were we seeing more of. I highlighted, the dramatic rise of complaints against operators of the rent-to-rent model, (see this mydeposits guide). I have been raising my concerns over this type of renting out property for a long while, but particularly over the Covid period, this type of arrangement has been tested to its limit and is breaking down on a massive scale.

Complaints over the 18 months of lockdown soared by over 40% at the PRS, with TPO confirming a similar trend, and have continued to rise. The main complainants are from landlords who have not got their rents, due the agents having tenants vacate or go into arrears and as many of the models do not have rent protection insurance in place, the money dries up for everyone.

I was pleased to hear that both NTSELAT and the government are now taking this matter seriously and sincerely hope this part of the market is brought into line. I highlighted that we at PRS have also just started to provide redress for a new accreditation scheme for property educators to raise standards in a sector, where so-called gurus peddle get rich quick schemes, often based on the rent-to-rent model. Other areas of concern included the increase of room-by-room licenses, fire safety and cladding, and more complaints on repairs and maintenance as tenants were forced to spend more time at home and these things became more important to them.

The NTSELAT team informed the officers that they had many tools in their arsenal, with many powers to impose fines for agents caught not complying with the regulations: £5,000 for not being a member of letting agent redress scheme, £1,000 for not being in a member as estate agent, £30,000 for not having client money protection, £5,000 for not displaying landlord fees in transparent way and £5,000 rising to £30,000 for charging illegal tenant fees, incorrectly taking a holding deposit, or exceeding the deposit cap.

I pointed out how important the role of trading standards is in the process, as the above offences are usually the tip of the iceberg and reveal a whole host of other problems belying these compliance issues, such as HMO licensing breaches, disrepair issues, failure to do legal safety checks, but even more extreme cases of people trafficking, and as one officer pointed out “cuckooing” where organised crime gangs often using a sham or shameless letting agent, get hold of property for a cannabis farm; to run county lines; or a brothel; or sex trafficking or modern slavery operation. Money laundering, according to another who had been a former copper, was rife in certain parts of the sector. As for poor Greta Thunberg, she would be sent into a blah blah blah frenzy if she saw how little the environmental regulations are being enforced.

Yes, a more joined up approach, more data sharing and combining resources is needed, but as I pointed out, the typical trading standards officer could even start the process of enforcement from the comfort of their own homes and in their pyjamas! By looking at an agent’s website to see if they display a redress and CMP logo as required by the law, double checking on the schemes own websites, whether they display their fees or whether there are hidden tenant fees. Many I have looked at do not and when moves to tighten up on material information displayed on advertising to prospective customers are pushed out by NTSELAT, the virtual shop front will be even more under scrutiny. A recent investigation involved trademark infringement for displaying a trade body logo when the agent was not a member and I have certainly reported fake membership to the respective body, when I have seen these logos online.  

NTSELAT pointed to their officer training tool kit, and they have been undertaking road shows up and down the country to educate and assist local trading standard teams to understand the legislation and powers. They encouraged the officers to use and complete the database, where local authorities share enforcement data and to reach out to other agencies in order to cooperate with them in a concerted way.

Now some of you reading this will be bemoaning that this is just another way of catching out good agents who overlook one of the red tape requirements or like a parking ticket. It is just a way of the council making money and the real rogues are so under the radar they will never be caught. However, there is no excuse for you not to be compliant and there are many ways and organisations that can help, not least Goodlord! We at the PRS have help and guidance available for all the legal requirements needed to be a good property agent or a professional landlord. 

It is challenging and how do you catch something you cannot see? Well, the answer to that is akin to those very clever scientists who discovered black holes or dark matter, you have to look for the bright lights that surround the void and it will stand out like a beacon. The vast majority who make the professional and decent part of the industry must be these shining lights and embrace and shape the regulation and compliance, stick to, and uphold the legal requirements and call out poor and substandard practices. It is not just down to somebody else - to enforcement or legislators, it is down to us all. 

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