An amendment to regulate letting agents by bringing them under the scope of the Estate Agents Act only just scraped through in the House of Lords.
The majority was only five, with 211 supporting Baroness Hayter’s proposal and 206 against it.
Almost with exception, the peers voted along party lines – raising a large question mark as to what will happen to the amendment when the measure goes to the Commons.
This was the second time that Hayter, a Labour peer who chaired the now defunct Property Standards Board, had moved the amendment to the Enterprise and Regulatory Reform Bill.
If – and it is a big if – it is approved by the Commons, it would mean that letting agents would have to belong to an ombudsman scheme and could be banned by the Office of Fair Trading – which currently does not recognise letting agents as estate agents.
The move would also prevent estate agents who had been banned from opening up the following day as letting agents.
On the first occasion she withdrew her amendment as a matter of procedure after the Government made its opposition clear.
Last week, the Government continued to maintain its opposition.
Speaking for the Government, Viscount Younger of Leckie, parliamentary under-secretary at the Department for Business, Innovation and Skills (BIS), said that expanding the supply of rented homes was “at the heart of the Government’s strategy. We want a bigger and better private rented sector.”
But boosting supply, he said, meant avoiding excessive regulation.
“Excessive regulation, however well intentioned, can result in precisely the outcomes we want to avoid,” he said. “That is why we did not proceed with the proposals of the previous Government, such as a national register of landlords and the full statutory regulation of letting agents.”
He went on: “We have heard a number of people express the view that the lettings market is totally unregulated. That is not in fact the case.” He drew attention to legislation such as the Unfair Trading Regulations, and Unfair Terms in Consumer Contracts Regulations.
He added: “We know that trading standards bodies use these powers to prosecute lettings agents. Some very substantial fines, and indeed prison sentences, have been handed down to agents who engage in serious misdemeanours, such as misrepresenting their membership of professional bodies, or indeed misappropriating clients’ money.”
He said that he strongly supported “making better use of existing regulations before we create new ones”.
Hayter, in wrapping up the debate, pointed out that current housing minister Mark Prisk wanted regulation of letting agents back in 2007.
The wafer-thin majority in the Lords did not stop the lobbyists from greeting the amendment almost as though it was a done deal.
Ian Potter, managing director of ARLA, said: “We all look forward to working with the Government on the Bill as it moves back to the Commons for final approval.”
The British Property Federation said it welcomed the amendment “that will introduce statutory regulation of letting agents”.
Property Ombudsman Christopher Hamer said: “This will mean greater protection for a number of consumers.”
Peter Bolton King of the RICS sounded a note of caution, saying that the decision was “one step nearer to this vital change becoming law”.
When the Bill does get back to the Commons, much will depend on the usual behind-the-scenes horse trading. While the Conservatives are against regulating letting agents, their coalition partners, the Lib Dems, support the idea.
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Comments
All Property Management Agents will be familiar with Gas Safe, the regulator that makes sure we do not kill tenants with Carbon Monoxide or blow up our Landlord's properties.
The legislation is simple and there is one body that overseas the leglislation and there is a meaningful and structured training requirement to qualify and practice.
NAEA, RICS, ARLA, UKALA, NALS, TPO (and all the others that don't come immedately to mind)??? there is simply too much choice of regulator and no meaningful regulation.
Eash and every one of the above would naturally believe they should be the single regulator but impartial logic says that the industry needs to pick one and devise a single set of standards tthat every one then sticks to. Customer Service being the one thing setting the difference between Agents.
With a single regulator and comulsory membership of that regulating body, standards will be established and maintained. Client and public protecion will be achieved and the aims of legislation met.
Natuarlly a single regulator deals a death blow to the likes of TPO and competitor regulating bodies, a move all will resist but at least everyone will know who is in charge, what they say goes and the public will have 1 organisation to seek redress from.
10 years on it is widely accepted that Saddam Hussein did not have Weapons of Mass Destruction. The whole “can be deployed in 45 minutes” propaganda was simply a convenient yet fictitious justification for a second war on Iraq. Exactly the same is thing is happening here; Peers and MPs are trying to solve a problem they and everyone knows exists but very few understand and are using “Rogue Agents” as the justification to solving the wrong issue.
Regulating Letting Agent is not going to “magic up” a solution. Forcing Agents to join an ombudsman scheme will not fix the problem that Baroness Hayter and Mark Prisk need to solve.
As has been discussed here recently under 800 complaints were upheld against Letting Agent Last year. 800 out of 3.6 million tenancies is not an indication of a problem that needs solving any time soon but without substance and without detail it is enough to give some credibility to the existence to the false stereotype Rogue Agent and therefore justification for regulation.
I have challenged those who read this forum to list the Rogue Agents, those whose misdemeanours have bee so bad their crimes made the industry or national press. Weston, Hussain, Hamilton, a couple of Martin and Co franchises, a Belvoir Agent, two lots in Plymouth. Already I am struggling to think of more (bad Agents is something I take an interest in) that is under 10 Agents that I can recall in the past 20 years. Now is it a case that I don’t read the papers or listen to the news enough or I am simply not privy to data available to Hayter or Prisk, supplied presumably by Potter, Hamer and Bolton King? If there are wrong doings enough to warrant a blanket regulation of all Agents why on earth aren’t these stories being covered by Letting Agent Today or Property Drum? Somehow I don’t see Ros Renshaw , Sheila Manchester or Grant Leonard as part of a some plot to portray the Letting Industry as whiter than white, so where exactly are these rogue Agents? I can only surmise that, like WMD, they do not actually exist. If they do show me.
With all that said I am not saying that Lettings should not have regulations. There is no-one more in favour of Standard operating procedures than me, but there is a big difference between working to a set of standards and being audited for compliance to those standards and simply being classed as an Estate Agent and having to join an ombudsman scheme.
It seems to me that while all these well intentioned people are clambering for regulation not one of them has worked out that regulation will not increase supply. Investors and Landlords are not steering clear of the stable, low risk 5-10% yields of Lettings because of bad Agents. In this un-regulated industry it is not hard to find an ARLA or SAFE agent (or 4 or even more) in every town that has a spotless reputation for integrity and faultless customer service.
There is a shortage of supply and it is in the country’s interest to resolve that problem but regulation of agents is not the solution, they suggestion it is either shows a worrying ignorance of the problem or an unhealthy manipulation of the situation by a few who have a vested interest in regulation.
How many Peers and MP's were found guilty of fiddling expenses, avoiding penalty pionts etc in the last 10 years?
Now let us count up how many rogue agents have been found guilty of wrong doing in the same time.
It is a serious question and someone should find out the answer.
The only benefit this legislation change will bring is revenue to the ombudsman and all his mates who have been lobbying so hard for this.
I bet not one of the 211 peers can find more than 6 convictions in the past 10 years yet will glibly bandy about the term "rogue agents"
If anyone is "rogue" in the last 10 years I would point directly at Yvette Cooper and her disgarcefully ignorant attemts to protect tenant deposits.
@IO
I agree it no longer applies, nor do the Rent Acts 1965 or 1968.
However, I am sure that the gist of the argument is that the controlling of rents by any means is counter-productive.
@David
That's because I had never heard of it, the later AScts being the ones that really matter as they introduced the concept of Fair Rents which is what really matter.
Having Googled the 1957 Act it is now obsolete possibly through the two later Acts. The heading in the Govt website says " no outstanding effects" or something like that - which means it has no application
Agree with IO, but you missed s.1 of the Rent Act 1957.
Clearly I am old!!
@Laurence
Rent Acts 1970 and 1977 Laurence.
I agree with your point but the issue is how and where will Landlords sell these properties unless they give them away?
Remember they will be trying to sell in a falling and panic market. It isn't just Landlords who will be looking to (or forced to)sell it will be a lot of owner occupiers for whom interest rate rises will be the final straw that breaks the financial camel's back.
LLs won't be selling to their tenants that's for sure unless the lending and LTV regime has changed dramatically as and when it does happen. Ditto for the owner occupiers forced to sell - where do they find buyers?
It would be a very good idea if the government appointed a decent firm of accountants to review all the costs involved with all this nonsense and tell us when letting properties ceases to be a viable business. My guess is that there will be some sort of tidal wave effect when interest rates start to rise. These nonsense costs are gradually eating away at landlords margins so an awful lot of tenants could quickly be faced with the choice of having to purchase their property or move out if the landlords are hit with more large costs. Protecting tenancies will not work for the same reasons that it did not work back in sixties (sorry, can not remember the exact dates).
No certainty it will become Law, in fact highly likely it will not, or even if it at a guess if not Govt policy the business organisers will ensure there will not be enough time in this Parliament to deal with it.
What is interesting is the reaction of existing bodies. Surely none of them is daft enough to believe they will be awarded the franchise for delivering regulation? The Govt made one silly mistake caving into lobbying in appointing more than one TDP scheme.
Surely not even they can be so foolish again - my money would be on a completely new truly independent body. How can any body with industry practitioners as members run a regulation scheme.
Be like lunatics running the asylum .................come to think of it!!!