The Private Rented Sector and, therefore, Lettings Agents, has been in the spotlight for over twelve months now. In part, this has been due to the economic climate and the negative impact on the sales market. Most Letting Agents I have spoken to have seen a significant increase in the levels of stock on their books and more competition with Sales only Agents moving into Lettings and resulting price wars.
However, it is not just due to the economic climate that there has been a focus on the Private Rented Sector. Late last year saw the publication of the Rugg Review which highlighted the importance of the sector and called for the Government’s assistance to grow the business of letting, whilst also providing effective redress for the worst landlords.
Then, in May this year, ARLA released details of their new Licensing Scheme, with the aim of protecting consumer interests from “rogue” agents.
The Licensing scheme operates in such a way that, to be an ARLA member, you must be licensed as part of your membership. Some of the key components of the license are:
- Each member must hold a gold standard professional qualification relating to lettings
- All members must undertake Continuing Professional Development
- Agents must have client money protection schemes in place
- All clients’ funds required to have an annual independent audit
- Agents must have professional indemnity insurance
- Agents must sign up to an independent redress scheme
- Agents must abide by a strict code of practice
In my opinion, Licensing represents a real opportunity for agents to set themselves as being a cut above their competition and the added protections such a license provides to the consumer, is surely an excellent selling point, particularly with increased competition. I do feel, however, the biggest hurdle is communicating the benefits to landlords.
ARLA licensing may well make the trade journals and the News section of their website, but how many prospective clients read those? With the popular press not likely to spread the word, it is down to you to communicate the additional safeguards landlords will receive if they allow you to manage their properties for them. You should ensure your website shouts about the benefits. It may say you are a member of ARLA, but does it mention the additional obligations placed on you as a result? Has your website been updated since Licensing came into force? What about any publications, paperwork or brochures? Is it part of your sales pitch when you speak to potential clients? You should use your membership as a real selling point as, otherwise, you may as well not be a member!
The NAEA are due to follow suit within the next year and so the same issues will affect sales only agents in due course. Make sure you have a plan of action as to how to get the most out of the Licensing Scheme, and put it into place.
Licensing may be seen as an additional administrative burden, more red tape to cope with. But looking at it positively, it may drive out those “rogue” agents that are undercutting you and providing a poor service, therefore tarnishing the industry as a whole.
As a Chartered Accountant, being a member of the Institute gives us a certain level of kudos and clients understand we are bound by certain rules and regulations. My hope is that licensing has the same positive effect for both ARLA and NAEA members.