The new report – ‘Opening the door’ – outlines the information imbalance which works against consumers in the private rented sector. Just 15 per cent of tenants surveyed were able to find all of the information they wanted about a prospective landlord or letting agency. Over a quarter could find very little or even no information and a third who had found information obtained it from the landlord1 themselves. By contrast landlords or letting agencies can ask tenants for references, deposits, guarantors or other personal and financial information.
Almost nine in ten renters agree that a website to share experiences of landlords would help them to make better decisions before signing a tenancy agreement. Renting is one of the biggest financial commitments consumers make, with private sector renters paying an average of £816 a month for a one bedroom home and this rises to £1,406 in London.2 Yet worryingly, Consumer Focus research shows that over a quarter of renters had cause to complain in the past two years, making the private rented sector the second most complained about market.3 Many of the 1.1 million households who sign up for a new tenancy experience problems with their landlord which only become apparent after signing a legally binding agreement.
Reputational regulation has worked well in other sectors with commercial sites, such as eBay or Amazon, displaying consumer reviews and feedback to people have access to a range of information before they make a decision on what to buy. Consumer Focus believes that a similar site based on constructive feedback could help solve the information imbalance and help people seek out more reputable landlords and avoid the bad ones. Research by the consumer champion has found that websites where consumers share experiences are influential and that, perhaps surprisingly, most people leave positive not negative feedback.4 The site would also reward and incentivise the better landlords in what is a rapidly growing market.5
Claire McAnulty, Policy Expert at Consumer Focus said:
‘Currently the landlord is firmly in the driving seat despite rent being a massive outgoing for many of us. People often sign up with little more than a gut feeling after a cursory tour of the property – if they are lucky, they might have a word of mouth recommendation. The best way to help private renters is to ensure they have the information to know what they are getting into.
‘There is huge potential for a feedback website to give tenants a better idea of whom they’re renting from. Getting behind a feedback website could also help the industry establish a better reputation and build up much-needed trust with renters.’
Shelter Chief Executive Campbell Robb said:
‘Shelter welcomes the findings of this report which clearly highlight the need for better regulation in the private rented sector. The findings echo complaints we hear every day from private tenants about the limited protection they have when they rent privately and the desperate lack of available information on landlords to help them make an informed decision.
‘We are particularly keen to see the use of landlord accreditation grow. It is vital to raise standards, help tenants get information about their landlord, and provide landlords with the advice and support they need to offer a professional service to their tenants.’
Ian Potter, operations manager of the Association of Residential Letting Agents (ARLA), said:
“We have long-campaigned for better regulation in the private rented sector and have already introduced a licensing scheme for members of ARLA to help ensure greater consumer protection.
“The key issue is that in the absence of any government-driven regulation, there will always be unethical lettings agents and landlords who can operate outside of the jurisdiction of an organisation such as ARLA. This is why we advocate that the most important step in renting – or letting – any property is to thoroughly research local letting agents and fully understand the market context. It is only by doing this at the outset of the process that a tenant or landlord can ensure they are protected.
“Other measures to protect tenants, such as the consumer feedback tool that Consumer Focus is proposing, are worth considering. However, renting a property is not as simple as buying a product; there are many factors to take into account which can influence whether or not a tenant has a positive experience, not least the fact that renting a home is a very different, emotive experience than other major financial purchases.
“It is also the complexity of the process which means the focus should be on improving tenant awareness of the rental process and stamping out bad practice from the outset, rather than creating mechanisms for public complaint after a tenancy agreement has been signed.”
In 2008, the last Government published a review of the Private Rental Sector in England (the ‘Rugg Review’). The review concluded that there is a supply and demand imbalance, particularly for properties affordable for tenants on low incomes. As a result, there will be a continuous demand for properties even if they are owned by landlords with a bad reputation. Consumer Focus’ report argues that for this reason market forces alone cannot be relied upon to ‘regulate’ the sector.
To help address consumer protection issues in the private rental market, Consumer Focus would like to see:
•The introduction of a pilot tenant feedback website, ideally in conjunction with one of the tenancy deposit management schemes6. With input from tenant and landlord bodies a successful pilot would ensure that a robust, balanced and large-scale scheme could be taken forward in the long term. Initial support would be needed from a third party to fund and independently evaluate the pilot website.
•A minimum common standard and quality mark to be introduced for all private landlord accreditation schemes. There are at least 80 different types of voluntary schemes operating in England7, meaning the standards that landlords must meet vary considerably. A common quality mark would act as a benchmark to reward good landlords and offer assurance to their tenants.
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