Islington council will underwrite the cost of running London's first free letting agency, which is expected to launch next spring.
If it proves successful it is inevitable that other local authorities will follow suit amid growing concerns about rogue agents who prey on desperate renters.
Islington says it is particularly concerned about the agents who charge exorbitant fees for minor administrative tasks such as checking references and credit status, taking property inventories, and renewing or ending contracts.
The social letting agency will be free to renters and charge “transparent and reasonable” rates to landlords who use the service. And it will only take on properties which are safe and in good condition. It will also specialise in homes which are affordable to people on middle and low incomes.
The number of people renting homes across London outnumbers home owners, at around 51 per cent, and about a quarter of Islington’s households live in rented accommodation. The council expects this to rise to well over one in three by 2025.
Islington also has concerns about tenant safety, estimating that there are up to 8,000 homes in the borough which are being rented out despite being unsafe to live in.
“The borough faces several challenges in the private rented sector, including insufficient supply of affordable accommodation, some poor-quality housing, impacts of welfare reform, and an unregulated private rented sector management, leading to difficult conditions for some tenants,” says Irna van der Palen, the council’s head of private housing partnerships.
In order to attract landlords into the scheme the council will not only offer them low fees, but will guarantee rents are paid and assist with management of the property, including collecting rent.
“A social lettings agency would offer a better deal for private tenants through offering guaranteed good-quality properties, at an affordable rent, which are well managed by a large and professional organisation,” adds van der Palen.
However, if a tenant defaults the council could end up having to subsidise their payments.
“In order to incentivise landlords to have their properties let and managed by the council, it is key that the social lettings agency offers products that are attractive, viable and sustainable to landlords, and stand up to competition from other products and agents,” says van der Palen.
The news comes as tenants grow increasingly angry about the antics of some lettings agents. The property ombudsman dealt with 1,187 complaints during the first half of this year, a 37 per cent increase on the first six months of last year. In almost three quarters of cases the ombudsman upheld the complaint.
From this month all letting agents must join a Government-approved redress scheme which can arbitrate on problems. However, pressure group Generation Rent feels this strategy puts too much pressure on tenants to police the sector. It feels local trading standards officers should be doing more.