Newham Council in London has become the first local authority in the UK to publish a ratings scheme for every letting agents in the borough.
It is another first for the left wing authority which introduced borough-wide landlord licensing in 2013.
The London borough has conducted an audit of every letting agent in the area over two years to rate firms, known as the Fair Lettings Project, based on those that have in the past failed to refund deposits, pass on rental income, charged unjustified and astronomical fees or failed to address complaints.
The audit also considered performance, compliance with the law, delivery of best practice, and customer feedback.
Agents are rated out of five stars with the council recommending tenants use those with a rating of three or more.
Out of 159 agents, 125 met this recommendation, while 25 didn’t.
Overall, 82 achieved three stars, eight got two stars and 17 just one, while nine are still awaiting ratings.
Only one agent has been awarded the full five-star rating. This went to McDowalls, the first in the area to scrap tenant fees.
Firms can appeal the ratings six weeks after they first come out.
There is a fee of £130 to do this and the re-review will be delivered in 28 days.
All agents were given the chance the appeal their rating before the scheme went live on Monday this week.
The ratings will be reviewed annually.
Sir Robin Wales, Mayor of Newham, 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, which is a member of professional body RICS, added: “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 its 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.”
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