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Agents' code of conduct could happen in England, says PropTech chief

The man behind a leading lettings industry PropTech company says the new Code of Conduct to clean up the rental sector in Scotland could easily happen next in England.

Following on from the introduction of the Private Residential Tenancy in December, letting agents operating in Scotland are from last week required to join a Register of Letting Agents, which will be maintained by Scottish ministers.

In order to qualify for the register, agents will need to comply with a new Letting Agent Code of Practice and meet minimum training requirements.


Agents need to have written policies on a number of topics, including fees, terms of business, complaints, rent collection and end of tenancies.

They are also required to have written processes for identity checks, referencing, tenancy agreements, property management and more.

Other stipulations include professional indemnity insurance, Client Money Protection and a separate client funds account.

“The majority of agents will already have these processes and policies in place, but the new system requires them to have everything fully in order and in writing,” says Neil Cobbold, chief operating officer of PayProp in the UK.

“A Code of Practice ensures every agent is adhering to the same standards and the sheer depth of requirements should discourage any rogue or criminal agents from starting a new business.”

Before joining the Register of Letting Agents, firms will also need to make sure that all the relevant people in their business have appropriate training.

Every person directly concerned with managing and supervising day-to-day letting agency work will require training, unless they already have a relevant qualification.

Those registering may also be required to pass a 'fit and proper persons' test to determine whether they are eligible to carry out letting agency work.

"The provision of additional training where required can be seen as a positive change for the rental sector in Scotland,” suggests Cobbold.

"No matter how experienced, if agents brush up on what is expected of them, this can contribute towards improving the overall customer service experience of tenants and landlords.”

Once agents have complied with the Code of Practice and met minimum training requirements, they will be eligible for inclusion on the Register of Letting Agents.

All letting agents will need to join the register by September 2018; those who are not on the register and carry out agency work after this date could be fined up to £50,000 and handed a custodial sentence.

"The severity of the punishments for non-compliance shows that the introduction of the register is being taken seriously," explains Cobbold.

"However, it’s the enforcement of membership before the stated deadline which could determine its success. If membership of the register is low come September, it could lose credibility and potentially undermine the wider regulation framework being introduced."

Cobbold says that as has happened before, the new system in Scotland could be a precursor to similar regulations being introduced in England.

The most significant example is a ban on letting agent fees - introduced in Scotland in 2012 and set to be introduced in England, probably in 2019. 

"If this new system is successful in Scotland, there's no reason why similar rules can't be introduced in other parts of the UK," says Cobbold.

"It's unlikely these changes will trickle down for a while yet, but it'll still be beneficial for agents in England to monitor their progress."

Cobbold points out that the new Scottish system is similar to a number of proposals put forward by Sajid Javid at the Conservative Party Conference in October. These included agents complying with minimum training requirements and an industry code of conduct.

"It's clear the English government is also looking to regulate letting agents more closely, and it's surprising that there's been no further mention of these specific proposals since they were put forward several months ago," he concludes.

  • Andrew Hill

    Surely, the costs businesses have to pay for CMP and memberships to "professional" bodies should come down if this forced upon us? As a new lettings agency dealing with coming to terms with the potential tenant fee ban, how are we expected to not pass costs on to landlords who, in turn, will pass the higher costs onto tenants in the form of rent?

    Personally, I don't think PropertyMark are as credible - look at Foxtons, still showing on propertymark register and still showing the logo on their website yet convicted for failing to prove their properties were safe? What even does property mark stand for if not to show agents actually know what they're doing and are compliant with the law? I expected Foxtons to lose the property mark seal after being convicted of failing to provide safe properties but apparently, so long as you pay your fees, you don't have to abide by their code of conduct.

    As for CMP as a whole, another expense... What if you don't have any staff? I don't think CMP boosts credibility. "Yes, Mr Client. We have CMP in place so that you're protected should we decide to fail to pass on monies due." - Professional Indemnity usually covers client money from a staff point of view so CMP is really for the agents who don't trust themselves to look after their clients money.

    Frankly, if an agency gives reason for CMP, for example, because they've misappropriated client funds in the past, should they even be allowed to operate? I'd say no... If I was a landlord and I found out the agents I employed had previously misappropriated funds, even with CMP, I wouldn't want to deal with them.


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