Association of Residential Letting Agents (ARLA) introduced a licensing scheme for all its members as a code of practice, which aimed to protect tenants and landlords, emerged today. Similarly, the Times exposed a new licensing scheme planned by the Government to be put on private landlords to further protect the interest of UK tenants.

A review by Julie Rugg and David Rhode from University of York suggested a few key recommendations on the buy-to-let market in October last year, which are seen and reflected as references to the licensing scheme launched by ARLA and the proposal of the Government’s plan as reported by the Times today.

ARLA (Association of Residential Agents) proposed a licensing scheme to all of its members today after a survey revealing that 95% of consumers believed that letting agents should be licensed. It has also been reported that consumers lost hundreds of thousand pounds each year to unprofessional agents. Consequently, the scheme launched today by ARLA is to protect both the tenants and landlords from unethical letting agents as well as to establish higher industry standard of the UK buy-to-let market.

According to ARLA, as part of the licensing scheme, letting agents will have to offer the best practice of advice and service to consumers. They must also offer clients with appropriate money protection schemes as well as professional indemnity insurance. Besides, a gold standard professional qualification relating to letting is required for letting agents. Additionally, an annual independent audit is required for all clients’ funds. Furthermore, they must sign up to an independent redress scheme and should abide by the codes of practice. In return, customers should expect to be protected even their agents went out of business.

Likewise, the National Association of Estate Agents, Group’s sister organisation of ARLA, plans to launch its own licensing scheme later this year.

In response to the move of the ARLA licensing scheme, the Times has learnt that the Government will launch a licensing scheme to all private landlords, which they would have to register before letting their properties out to the market. As there was a concern of a growing number of landlords taking advantage of the tenants, this licensing scheme would further protect the tenants from deceitful landlords in the property market. According to the Times, all the private landlords (developers, buy-to-let investors and “accidental landlords”) would have to pay about £50 for registration. These landlords also have to comply with certain standards and could face a struck-off if they failed to do so.

This new licensing scheme will be outlined officially in Green Paper within ten day, claimed by the Times. The aim of this scheme to protect the tenants is a “positive step in the right direction”, which has received a lot of positive comments from the public. However, there might be a possibility that some small buy-to-let investors would be driven out of the market.

These licensing schemes should be seen as effectively improving the standard and services in the buy-to-let market; as Ruth Lilley, head of membership and professional development at ARLA, previously criticised the rental market as a black sheep without regulations. After all, tenants will certainly benefit the most from these double protections of the Government as well as the ARLA.

Get a Buy to let property Insurance today from Discount Landlord Insurance.