Letting agents are operating in an unregulated sector which is “reminiscent of the Wild West”, a leading housing charity has claimed.
Shelter Scotland is calling on the Scottish Government to introduce new legislation to regulate the industry.
Director Graeme Brown hit out at “cowboy letting agents”, who he said were causing “havoc and upheaval to despairing tenants”.
The number of families in private rented accommodation has almost doubled in the last 10 years to 290,000 households.
Shelter Scotland said complaints about letting agents to the UK’s property ombudsman had increased by 123% in the past five years.
Mr Brown said: “Private renting in Scotland is growing and changing, driven by the fast-increasing number of families and individuals looking for a safe, secure and affordable place to call home.
“Despite this, letting agents have been allowed to carry on in an unregulated sector reminiscent of the Wild West, with the flagrant disregard for the law by some causing havoc and upheaval to despairing tenants.
“We’re particularly concerned by the growing number of families with children exposed to unscrupulous and sometimes illegal practices of some letting agents.
“Not only do they lose out financially but the upheaval and uncertainty of battling cowboy letting agents can mean they’re prevented from laying down roots in communities and schools and getting on with their lives.”
There are 155 letting agents in Scotland who have voluntarily signed up to the professional body, the Association of Residential Letting Agents, which has a code of conduct.
It is estimated there are about 500 letting agents in total in Scotland, involved in more than 150,000 private lettings a year.
Shelter Scotland believes an independent regulatory body should be established for the sector and a formal, mandatory code of conduct should be introduced. It is also campaigning for an independent scheme to be set up to deal with any disputes that arise.
A Shelter Scotland report said rules governing letting agents were “not effective” and argued that “further regulation is the way forward”.
It said: “An ideal scheme would require letting agents to register and adhere to a code of conduct which promotes fair and honest practice to tenants and landlords.
“There then needs to be a formal way for complaints to be dealt with.
“Ultimately there needs to be a way of penalising those letting agents who fail to adhere to the code of conduct.”
Mr Brown argued regulation would benefit responsible letting agents, saying: “There are many letting agents who offer a professional and responsible service but see little reward for playing by the rules. A level playing field would benefit reputable agents and ensure the cowboys are driven out.”
A Scottish Government spokesman said it was committed to improving letting agent practice, stating: “That is why we clarified the law last year to make it clear that the charging of premium payments for entering into a private rented tenancy was not allowed, and also introduced the Tenancy Deposit Scheme to safeguard tenants deposit money. Further regulation of the letting agent industry received broad support, including from the industry itself, as part of a recent consultation on a new strategy for the private rented sector.
“The Scottish Government’s strategy is due to be launched on May 30, and will set out our plans in this area.”