Newham publishes UK's first ratings for letting agents

16 October 2017 in Housing
​​Newham Council has today published the UK’s first ever ratings scheme for letting agents  which aims to protect residents and landlords from cowboy businesses.
Newham has published an individual zero to 5 star rating for each letting agent registered in the borough. A five star rating is only awarded to letting agents who deliver a gold standard service.

The ratings will be available to view on the Newham Council website from Monday morning.​

The scheme is designed to encourage all agents to improve the service they offer tenants and landlords.

As a precursor to this scheme, the council undertook an audit of every single letting agent in  the borough over a two year period, known as the Fair Lettings Project. it identified which agents have in the past failed to refund deposits, pass on rental income, charged unjustified and astronomical fees or failed to address complaints.

The audit also considered performance, compliance with the law, delivery of best practice, and customer feedback.

As a result of this work, there has been a 44 per cent increase in the number of letting agents who are now compliant, this has risen from 35 per cent to almost 79 per cent.

As a result of setting up the rating scheme, one agent, McDowalls, has become the first in the borough and one of the first in the country to scrap tenant fees, and is therefore the first to achieve the full five-star rating.

The aim of the project is to support the 70,000 households who rely on the private rented sector in Newham.

The scheme has already attracted support from some of the housing sector’s key players including Generation Rent, and housing charity Shelter and housing association Peabody.

Newham has a strong track record of protecting residents who rely on the private rented sector (PRS). In 2013 the council became the first in the country to introduce mandatory borough-wide licensing for all private property rentals. This has resulted in over 1200 prosecutions, and last year Newham alone was responsible for 70 per cent of all prosecutions against criminal landlords in London.

The listings published today are designed to complement the licensing scheme and forms part of the council’s commitment to support residents as they battle the effects of the broken housing market.

The aim of the scheme is to stop residents being ripped off by lettings agents who may fail to refund deposits, charge unjustified and astronomical fees, or fail to address tenant complaints. It also encourages landlords to use the most professional agents to act on their behalf in dealings with tenants.

Letting agents are currently only lightly regulated. However, they are responsible for ensuring the safety and security of many rented properties, securely holding large deposits, collecting rents, negotiating between tenants and landlords when problems arise, and ultimately making sure both sides play by the rules.

Mayor of Newham, Sir Robin Wales, said: “We are stepping in to help protect residents from businesses and individuals who exploit extreme demand in the property market to rip off and overcharge.

“Alongside our private rented sector licensing scheme, this initiative aims to drive up the quality of homes for rent in the borough, and increase the professionalism of those who work in the industry. We have also seen great results with the level of non-compliant businesses falling dramatically.

“Our star rating system will give tenants and landlord’s greater confidence in using lettings agents, but the Government must act urgently and follow our lead. Councils must be given the power to demand mandatory registration in order to properly regulate the market.”

Chris Baker of McDowalls Surveyors Limited, the first in the borough, and one of few in the country to scrap tenant’s fees said: “I’m proud to be the first agent in Newham to achieve a five star rating – and I’d encourage the government to make good it’s promise to make all agents drop fees for tenants – so we are all on a level playing field.”

“The best agents have to work hard, making sure everything is done properly for clients. We have to make sure contracts are drawn up properly, that credit checks are sound, and that the properties are safe. But some agents don’t and that makes life harder for others, because clearly less professional agents can do the job on the cheap.

Seb Klier, London Campaigns Manager, at Generation Rent, praised Newham’s approach and said: “We know that too many renters have very poor interactions with agents when they are looking to find a new home. Generation Rent has long called for action to implement greater overall standards of service within the industry. That’s why we support Newham’s calls for mandatory registration of all letting agents, which follows their already existing and very successful system of property licensing across the borough.”

John Bibby, senior policy officer at Shelter, said: “The chronic shortage of homes is pushing rising numbers of people into expensive, unstable private renting. Both renters and landlords could benefit from more information on who they can trust.

“Newham’s rating system will provide landlords with credible, independent reviews to help them pick a decent letting agency to market or manage their property, which should have a positive knock-on effect for tenants. If this works, it will help to make the case for the wider reform of private renting.”

Peabody Housing Association Chief Executive, Brendan Sarsfield, said: “Newham’s licensing of the private rented sector has proven to be a great success since 2013 and I’m sure the letting agent rating system will also help to support Londoners privately renting in the borough.”