Unscrupulous operators in the letting sector could be the next big scandal as banned mortgage brokers and former estate agents look to move into a less regulated environment, says PMS executive chairman John Malone.
Speaking at a Money Marketing round table, Malone said the lack of regulation in the rental sector coupled with an increasing number of tenantsmeans the market is open to abuse.
He said: “If people are moving out of estate agency because there are less transactions and moving into the rental space, these guys will again get away without being any part of a regulated authority and somewhere along the lines that is going to be where your next scandal is going to be.
“I think the previous Government knew that, so somewhere along the line that has got to happen.
“If the rental market is going to progress at the rate that we think it is, that is where the next scandal will be.”
He added that banned mortgage brokers moved to the rental sector as the lack of regulation makes setting up a lot easier.
He said: “They will be going into the rental market. They do not need regulation, set up a shop tomorrow and, bang, they are away. And they do not even need a licence.
Building Societies Association head of mortgage policy Paul Broadhead said the Government would find no opposition if it were to decide to regulate the sector.
He said: “That is something that lettings industry should be calling for itself because they want those cowboys out of their industry, so any Government that wants to go there really is pushing at an open door. But they just have not got the appetite.”