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Newham Council launch star rating scheme for letting agents

Sunday, October 29, 2017 - Newham Council

Newham Council has published the UK’s first ever rating 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 all 159 letting agents currently registered in the borough. A five star rating is only awarded to letting agents who deliver a gold standard service.

At the rating scheme launch in October 2017:

  • 79% of agents have been awarded 3 stars or above and assessed as compliant.
  • 16% of agents have been awarded 1 or 2 stars and assessed as non-compliant.
  • 5% of agents are still being assessed.

Agents rated 4 stars or above must be a member of a recognised professional body. To be rated 5 stars they must also charge no fees to tenants or provide tenant credit rating data.

The scheme is designed to encourage all letting agent to improve the service they offer to 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 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, the council have reported a dramatic increase in the number of letting agents who are now compliant, rising from 35% to 79% of all agents.

McDowalls, a long established business based on Barking Road and close associates of London Property Licensing have become the first in the borough to scrap tenant fees and achieve the full 5 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.

The star rating scheme is designed to complement the council’s property licensing scheme that has been in force since 2013. It seeks to encourage landlords to use the most professional agents to act on their behalf.

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 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.

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.

The ratings have been published in full on the council’s website together with more information about how the scheme works.

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