Scheme to combat rogue lettings agents under attack

By Shari Vahl
Reporter, You and Yours, BBC Radio 4

image captionThe owner of this two bedroom Ilford house found several beds in the property

Landlords and tenants who have been defrauded by a rogue letting agent say a government-approved scheme set up to protect them is useless.

The Property Redress Scheme (PRS) does not take effective action, they say.

The PRS said it was not a regulator and could only help when an agent acted legally.

By law, letting agents cannot trade unless they are a member of one of three schemes, including the Property Redress Scheme.

However, dozens of customers of one rogue agent in London said when things went wrong, victims were not protected, a BBC You and Yours investigation has found.

Doni Soeyono bought a small two bedroom terrace house in Stanley Road in Ilford, east London 18 months ago as a rental property.

He signed up with Carter Stones, just round the corner in Connaught Road, which promised him a couple would rent the house for about £1,300 a month.

But in reality the couple Carter Stones claimed were renting the property did not live there.

Instead up to eight other people do, none with a contract. Mr Soeyono has not received any rent for six months.

He managed to get inside the house in the autumn and took pictures showing the sitting room with several beds.

When I went to the property with Mr Soeyono, we were shouted at by two women, who told us to go away. Then they left and walked down the street.

image captionTwo women in the Stanley Road house shouted at our reporter before departing

Mr Soeyono says he's seen one of the women a number of times and believes she lives in the property, helping to operate a subletting ring involving about 16 people.

But the owner says he has not had any useful response from Carter Stones.

Several landlords have contacted You and Yours complaining about unpaid rent, or legal documentation, and claim multiple people are living in the properties without any right to be there.

'Alarm bells'

For more than 30 years, Teresa's family have owned a two bedroom terraced house in nearby St Mary's Road, Ilford.

She signed a management agreement with Carter Stones and was assured that a couple would be living in her house.

"Alarm bells rang when the council contacted me to ask who was responsible for the council tax at the house," Teresa said.

"They said many people were living in the house, but not the couple on the tenancy agreement."

Teresa says the people we met coming out of Mr Soeyono's house are also organising the subletting not only of her house but also her garage.

"I saw curtains up in the garage window, and the door was blacked out, but they would not let me in.

image captionThrough one landlord's letterbox we could see shoes of varying sizes

"Carter Stones declined all responsibility for this. They were not transferring me the rent and I couldn't get any sense out of them, even after telephoning them on a daily basis," she told me.

I tried to talk to Carter Stones, but while I could see two people in their office, each time I knocked they hid behind the door.

Since 2014 it has been a legal requirement for letting agents to be a member of one of three government-approved dispute resolution schemes: the Property Redress Scheme, the Property Ombudsman or the Ombudsman Service.

The Property Redress scheme costs £200 to join. It is run by the insurance company Hamilton Frazer, and unlike the two other organisations it is run for profit.

Carter Stones used to be a member of the PRS.

Last year the PRS upheld four complaints against Carter Stones but the company failed to pay compensation of £15,406. The PRS cannot enforce that order - the only redress it has is to expel rogue traders.

So in March 2016 the PRS expelled Carter Stones, making it illegal for the firm to continue trading. When Carter Stones stayed in business, Trading Standards became involved.

Redbridge Trading Standards then fined Carter Stones £5,000, but the company did not pay, and continued to trade. Trading Standards is still investigating.

image captionShakeel Ahmed has struggled to get his deposit back from Carter Stones

In November 2016, seven months after Carter Stones was expelled from the scheme, Shakeel Ahmed paid £2,350 as a deposit to secure a flat to rent.

Even though the flat fell through, Carter Stones kept his money.

'Not effective'

Several other prospective tenants have since contacted me with the same story.

When the landlords and prospective tenants complained to the PRS, they were told that as Carter Stones had been expelled from the scheme, nothing could be done.

"The PRS is pretty much useless," Mr Soeyono told me.

Teresa said: "The PRS is not effective at all, absolutely not in the case of a rogue agent. They're just using the scheme for their benefit."

The PRS does not require letting agents to sign up to a code of conduct, and does not publish a list of companies that have been expelled on its website.

Paul Shamplina, who is on the PRS advisory council, said that none of the redress schemes are regulators, but are "escalated complaint handling schemes put in place to prevent service related complaints from having to be issued in the court by consumers.

"This allows them access to a much quicker and cost effective remedy to resolve matters with property agents."

However, he said that when companies do flout the law, redress schemes are powerless, and complainants must rely on Trading Standards.

You can hear more about this story on You and Yours on BBC Radio 4 on Monday at 12:15 GMT.

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