Why self regulation just won't work

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"In an era when young kids get sent to jail for stealing a t-shirt and MPs get imprisoned for fiddling their expenses what makes fraudulent lettings agents get away with a smack on the hand? Self regulation just won't work."

I have spent most of my career in the heavily regulated social rented sector which the Housing Corporation, Audit Commission and now the Tenant Services Authority and Homes and Communities Agency have all been involved in regulating. 

These agencies have some draconian powers if you fail to meet their regulatory standards - from fines to effectively closing down the business and transferring the homes managed to another housing association.  So why has the government been so reluctant to bring about regulation in the private rented sector?

In my view there needs to be some sort of level playing field in the rented sector in the UK.  It’s recognised that social tenants need the protection of regulation and it’s clear that tenants and some landlords in the private rented sector also need the same type of protection.

We have had direct experience of this with the recent shocking case of Premier Places (Redditch Letting) Ltd where the MD and accountant admitted to fraud, which led to the loss of hundreds of deposits as the two effectively stole their clients’ money.  TDS paid out over £63,000 to tenants, and landlords may have been left without their share of the deposit money or any rent monies held by the firm.

What shocked me most was the sentence of just 250 hours of community service and a 12 month suspended jail term (see ‘TDS hits out at lenient sentencing’ The Negotiator, 28/09/2011)

Until the courts start to give tougher sentences or the government decides to introduce stronger regulation then these cases are likely to increase.  That’s not scaremongering because every month we are dealing with cases similar to the Premier Places case. 

We simply have to have better protection of tenants’ and landlords’ deposits and rent monies.  Regulated agents do have client money protection insurance and these agents recognise the benefits that this can bring in terms of consumer protection. . 

In an era when young kids get sent to jail for stealing a t-shirt and MPs get imprisoned for fiddling their expenses what makes these fraudulent lettings agents get away with a smack on the hand?  These types of punishments will simply encourage those unscrupulous agents who want to cut back on fees and steal the clients’ money when things get tight.  We saw what happens with the banks when self-regulation was ineffective but there is no sign of government wanting to regulate.

What we need is a nationwide alliance of regulated agents, the professional bodies, the ombudsmen and the Tenancy Deposit Schemes to come together and agree a form of effective self-regulation that will really work and which can be brought to the consumer’s attention.  Wasn’t this what the Property Standards Board was about?  Perhaps it’s time to resurrect that idea?


Posted by Steve Harriott on 26 October 2011

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