* Loss of monies due to the unlicensed agency holding the funds going into administration;
* Poor advice to landlords, for example about their legally-required deposit protection responsibilities, which can result in loss of the deposit for tenants and/or a fine for landlords;
* No commitment to best practice or any form of independent redress scheme for when things go wrong.
To prevent the practices listed above, and offer assurance to consumers, ARLA has launched a Licensing Scheme for its members, thereby establishing the highest standards for letting agents in the UK.
Ruth Lilley, Head of Membership and Professional Development at ARLA, said: "ARLA has lobbied the Government for 10 years to assist us in establishing higher industry standards.
"For too long the rental sector has been seen as the black sheep of the property market with a lack of regulation of and a requirement for redress to protect the consumer when the agent’s failings are to the financial detriment of that consumer.
"The ARLA Licensing Scheme will create the gold standard for letting agents in the UK, offering consumers best practice service and advice – as well as a commitment to the protection of their money."
All ARLA members now need to be licensed as part of their membership, which includes the following implications:
* Each individual member will hold a gold standard professional qualification relating to lettings;
* All members must undertake Continuing Professional Development;
* Agents must ensure they have client money protection schemes in place to protect all tenant and landlord funds held by their office;
* All clients funds require to have an annual independent audit;
* Agents must have professional indemnity insurance in place;
* Agents must sign up to an independent redress scheme;
* Agents must abide by a strict code of practice.
None of the above is compulsory for letting agents as standard at the moment.
ARLA’s sister organisation, the National Association of Estate Agents (NAEA) will follow suit with the launch of its own licensing scheme later this year.
Adam Sampson, Chief Executive of Shelter, said: "It is high time the Government acted to introduce statutory licensing for all letting agents, something that Shelter has been campaigning about for some time.
"However, industry-led best practice is a positive step in the right direction. We welcome ARLA’s new licensing scheme and it’s commitment to raising standards in the sector.
"All consumers should have the right to expect a professional letting service, and have access to redress when problems arise."
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