Market Forces Don't Set Standards - Deposit Scheme Chief WarnsBy Tenancy Deposit Scheme, PRNE
Monday, February 28, 2011
LONDON, March 1, 2011 - Despite one in six households now renting, there has been a market
failure to educate the consumer in the private rented sector, warned the new
Chief Executive of the Tenancy Deposit Scheme, Steve Harriott. He was
speaking at the Annual Conference of the Association of Residential Letting
Agents, ARLA, the lead professional body for the rental market, held in
London today. (Tuesday March 1).
The letting agents were challenged to take the lead in educating
landlords and tenants in a major drive to improve standards across the
private rented sector.
"Market forces cannot be relied on to set standards. Only well informed
customers can know what they should buy into and so be able to demand high
standards of service and protection and understand the dangers posed by
cowboy letting agents," said Mr Harriott. "This becomes more important by the
day as, according to the latest English Housing Survey, one in six homes are
now in the private rented sector," he added.
He said that, with billions of pounds in rents and deposits at stake, it
is surprising that tenants still do not know enough to ask if their money is
safe. "Fully informed tenants would want to know about the property and the
rent, the quality of the letting agent and how their rent and deposit would
be protected. They would want to see league tables setting out fee levels,
service standards and complaint and dispute handling performance."
"Agents are in a position of trust, just like MPs, but rogue letting
agents appear to be treated more leniently. The courts are locking up MPs who
steal GBP13,000 but ignoring agents who steal hundreds of thousands of
Mr Harriott reminded delegates that the Rugg Review of Private Rented
Sector Housing said that market forces do not police management quality. The
Review called for the mandatory regulation of letting agents and recommended
that registered social landlords should be encouraged to enter the
marketplace and sell their rental management skills to private landlords.
"I know that this is beginning to happen across the country and is being
discussed in housing association boardrooms," he said.
Mr Harriott pointed out that mandatory tenancy deposit protection
provides the only legal protection for the consumers' money that is coupled
to sanctions that bite. As a result, letting agents with membership of a
deposit protection scheme should put that safeguard at the forefront of all
their marketing efforts.
"Uninformed customers lead to market failure. This allows unqualified
rogue agents to continue in business, reduce rates to the bone to win
business and drive quality firms to the wall. Then, when the going gets tough
they steal their clients' money and do further damage to the reputation of
Mr Harriott commended the self-regulation of ARLA and its members with
the code of practice, client money protection and insurance to protect
landlords and tenants and its rigorous training programmes. He said that ARLA
must continue to promote itself as an effective self-regulator.
"There is a twin-track approach of effective self-regulation and customer
education," he said. "Tackling the issue of market failure is critical. I
would like ARLA, the other professional bodies and the Tenancy Deposit Scheme
to work together to solve it."
Editors' note: Steve Harriott became Chief Executive of the Tenancy
Deposit Scheme last September and was appointed to the Board shortly
afterwards. He has had long experience of the not-for-profit housing sector
as Chief Executive of the St Pancras & Humanist and AmicusHorizon housing
Media contact: Malcolm Harrison, +44(0)20-7581-8335
Tags: London, March 1, Tenancy Deposit Scheme, United Kingdom