External regulators also provide a neutral place to take complaints to.
In the property industry, estate agents have been regulated for some time, whereas lettings agents don’t have a regulatory body as yet. Yesterday, think tank the Resolution Foundation called for lettings agents to be covered by the Estate Agents Act. This would give the Office of Fair Trading (OFT) the power to close down lettings agents. It would also mean that the industry would have to offer an ombudsman scheme. But do we really need more regulation?
I think we don’t. Especially not in Scotland, where it may only create unnecessary red tape. Let’s look at what this type of legislation would aim to achieve: one goal would be to ensure tenants receive their deposits back at the end of a tenancy in a timely and straight forward manner. Another would be to clarify the ‘fee’ situation and determine what lettings agents may or may not charge.
Both of these issues are close to being dealt with north of the Border. Tenancy deposit schemes (TDS) were introduced earlier in the year and are mandatory for each landlord. Moreover, the Scottish Government is currently looking to amend the law to effectively ban all fees charged by lettings agents. With these main issues off the table, what would be the benefit of further regulation?
The establishment of an ombudsman system would, in my opinion, only serve to duplicate what the Scottish Government has already recognised and taken the necessary steps to address. It would cause more regulation where regulation already exists and inevitably add to the costs of offering private rented property to tenants, which would ultimately filter down to be included in the rent being paid by the tenant.
The recent introduction of the TDS system, coupled with the upcoming changes to the law regarding ‘premiums’ and ‘fees’, are likely to have a dramatic effect on the lettings industry over the next 18 months. The resulting service sector having evolved into a more professional and transparent area of the property market than it perhaps is at the moment.
