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Revealed: revolutionary proposals for agency regulation, licensing and training

The government has published proposals for far-reaching changes to the way estate and letting agents are regulated, trained and licensed.

The proposals have come from the Regulation of Property Agents working party, set up last year by the Ministry of Housing Communities and Local Government.

Although this morning’s statement from the working party consists only of proposals, it is understood that they have already been signed off by the MHCLG and are likely to form the basis of legislation in the near future. 


For instance the working party’s chairman, Lord Richard Best, has told Letting Agent Today that one of the key proposals - a new regulator - is likely to be achieved within two years.

The proposals are contained in a 54 page document. Key recommendations are:

Scope of new regulation: “We recommend that all those carrying out property agency work be regulated (including auctioneers, rent-to-rent firms, property guardian providers, international property agents, and online agents)” but this regulation will not extend to property portals like Rightmove and Zoopla nor to the Airbnb-style short-let sector.

“However, we recommend that the legislation required to regulate property agents should allow for future extension to the scope of regulation (e.g. to include at a future point regulation of landlords, freeholders and developers – as well as retirement housing managers and Right to Manage companies).”


The new regulator: “We do not consider that an existing body could take on the role of the new regulator. Therefore, Government should establish a new public body to undertake this role. The new regulator should be established and run with regard to general principles of good governance, including: independence, openness and transparency, accountability, integrity, clarity of purpose and effectiveness. The new regulator, through its board, should be accountable to the Secretary of State for Housing, Communities and Local Government. It should publish an annual report on its progress in raising standards of property agents, using agreed key performance indicators – including customer satisfaction …

“We recommend that the new regulator take over responsibility for the approval of property agent redress and client money protection schemes. The new regulator should have the power to appoint a single ombudsman for property agents, rather than competing redress schemes, if they believe this to be the best way of improving standards.”

“The new regulator should be able to consider complaints from all sources. Where solicitors, lawyers or other professionals have evidence of possible illegal agent behaviour, they should be obliged to present it to the new regulator.”


Licensing: “To confirm appropriate qualifications and credentials, property agencies and qualifying agents should be required to hold and display a licence to practise from the new regulator. Before granting a licence, the new regulator should check that an agent has fulfilled its legal obligations (such as belonging to a redress scheme and submitting a copy of their annual audited accounts to the new regulator) – and that they have passed a fit-and-proper person test. We recommend that the new regulator should be able to vary licensing conditions as it sees fit and that it maintains accessible records of licensed property agents.”


Codes of Practice: “Codes of practice set out clear standards of behaviour. The Government has already committed to requiring that letting agents adhere to a code of practice, and we recommend that all property agents be required to do so. There should be a single, high- level set of principles applicable to all property agents which is set in statute: the ‘overarching’ code. Then, underneath, ‘regulatory’ codes specific to various aspects of property agent practice, binding only on those providing these types of services.

“Key principles for the ‘overarching’ code should include that agents must act with honesty and integrity; ensure all staff are appropriately qualified; declare conflicts of interest; and have an effective complaints procedure in place. To develop and maintain the ‘regulatory’ codes, the new regulator should establish a working group for each sector of property agency to work up sector-specific detail.”


Qualifications: “In the new regime, every property agency should be responsible for ensuring their staff are trained to the appropriate level and clear oversight arrangements are in place for junior staff. To ensure levels of qualification are appropriate yet proportionate, the working group recommend that licensed agents should be qualified to a minimum of level 3 of Ofqual’s Regulated Qualification Framework; company directors and managing agents should be qualified to a minimum of level 4 in most cases.”

The new regulator will be expected to develop a system of qualification quality control.



Leasehold and freehold charges: “The new regulator should be given a statutory duty to ensure transparency of leaseholder and freeholder charges, and should work with the sector (property agents, developers and consumers) to draw up the detail of the regulatory codes to underpin this aim as it applies to property agents … We recommend that the new regulator takes over from the First-tier Tribunal the power to block a landlord’s chosen managing agent where the leaseholders have reasonably exercised a veto. We also recommend that the new regulator provides information on managing agent performance to allow landlord freeholders - and where relevant, leaseholders - to make an informed choice of managing agent.”


Assurance and enforcement: “We recommend that the new regulator should have a range of options for enforcement action according to the seriousness of the infringement and how regularly it has occurred. These options should range from agreeing remedial actions and issuing warnings up to the revocation of licences and prosecutions for unlicensed practice.”

“The new regulator and other bodies (such as Trading Standards and redress schemes) will need to share information and work together effectively. There should be a system of flexible working between the new regulator and Trading Standards teams, and the new regulator should set out guidance clarifying their own and Trading Standards’ roles with regards to enforcement action to avoid duplication.”


The entire recommendations document is tightly packed with detail and will become a major talking point for the industry. You can read it for yourself here.

  • Paul Smithson

    They(the Government) won't be happy until they kill the business because of increased costs that in the end will get passed on to the consumer either by increased commission to vendors or rent to tenants.

    • 18 July 2019 07:04 AM

    No costs won't be passed on as many LL will just terminate LA contracts.
    LA are in the unfortunate position that many LL don't need to use LA.
    They will not accept increased costs as they will not be able to pass on additional LA costs as they are already passing on S24 costs.
    Tenants can only afford so much increases.
    Personally there is no way my business could afford a LA so I have never used one for management.
    Many LL will just be more prepared to undertake longer journeys to manage.
    In 5 years of a tenancy an hour's drive away I had to visit 6 times.
    So my time plus about £120 in diesel!!
    A lot cheaper than LA fees.
    LA can be useful but certainly not a necessity.
    When the price points become onerous LL will cancel.
    Certainly rather than increase costs vastly more consolidation is required.
    To remain viable at existing price points LA need far more properties under management.


    @Paul Barrett. You are talking solely from your own perspective. There are many LL's out there who will happily hand their properties over to agents as they want passive income. They aren't interested in squeezing every last drop of profit as their time is more valuable. Average commissions are around 10%, this could easily double, and LL's and LA's would still be profitable. Yes, many LL's would leave, but nowhere near as many as you think. Rents WILL continue to go up, despite what the papers say, there is plenty of money out there. Tenants aren't destitute.

  • Simon Shinerock

    I know a lot of agents gave pushed for licensing and regulation for a long time because they believe it will result in less competition and higher fees. Yes I recognise the more laudable arguments but call me cynical if you like if I put them aside. However, as someone who went through the regulation of financial services and saw first hand the mess it made and the implosion of that industry I would say this, beware what you wish for. I note in the report there is special mention of the Financial Conduct Authority and the regime it oversees, giving the clear impression that it is the model on which property regulation will be based. Prior to regulation there were over 200000 individuals selling insurance, investments and pensions, after regulation this went down to about 40000 and has never substantially recovered. The outcome has not really increased consumer confidence or provided a better service, it has however disenfranchised a large part of the population from receiving any advice at all. I liken the FS regulation to regulating car salesmen but not regulating the cars themselves. This may not have a direct parallel with property agency but it will be the same general approach that is applied. I’m all for light touch regulation that places responsibility on the right people and requires some individuals to complete focused and relevant training. The idea that all those engaged in property agency work should be subjected to a regime similar to that imposed on financial advisors is wholly disproportionate and if followed through will result in a similar implosion in the industry. The report doesn’t cover private landlords, not its remit apparently, although there is a recommendation that similar regulation be extended to cover them, ironic when you consider over half of landlords don’t use an agent for anything and the vast majority of problems originate from this part of the sector. Having read the report in full I think the bits that apply to estate and lettings agents are derivative, lack insight and do not feel like the basis for legislation. I am not saying there won’t be regulation of the industry, just that this doesn’t feel heavy weight enough to be its precursor. We already have a highly disparate and clumsy framework to consider and replacing it with a new one size fits all body will be a mammoth task, I wonder whether legislators will have the stomach to see it through given their other priorities. I have no doubt this report will excite a lot of reaction both for and against , we shall just have to see how things unfold.

    • 18 July 2019 07:38 AM

    You make some excellent well considered points.
    The issue of transparency has definitely resulted in far fewer being able to give advice.
    But remember a lot of the old advice was driven by the biased commission imperative.
    That has now largely been removed but with the effect that there are now far fewer advisers and yes far fewer are taking advice due to upfront costs!!
    A sort of no-win situation really!!
    Makes you wonder whether we wi see LA charging up front fees to LL when considering whether they are viable!!??
    LA definitely need to consider amalgamation.
    There are simply too many unqualified LA.
    We need far fewer but with more staff to carry out the increased workload which will come as more properties are under management as a consequence of consolidation.

    Simon Shinerock

    Actually Paul the commission incentive is alive and well in FS with Financial Advisors now able to charge an ongoing ‘trail commission’ on a clients entire pension pot for ostensibly carrying out ongoing reviews. It’s quite ridiculous really as these same advisors are not fund managers, do not for example consider direct ownership of property as an alternative, or even direct ownership of stocks and shares. In my past career I used to recruit train motivate and retain these people and I can tell you it was a challenging job, one that the regulator doesn’t understand and has no insight into whatsoever. The result is the public is still being ripped off, misled and now disenfranchised as well, it really is a mess.

    Simon Shinerock

    Also Paul, commission on term life assurance is still paid and is much higher than it used to be, sometimes well in excess of 200% of the first years premium, so much for the eradication of commission

  • jeremy clarke

    Unless I've missed something, unlike Wales, landlords are going to be able to trade without registration and licensing? I suspect that there are more landlords that need regulation than agents. Another half baked idea from a government with zero direction or understanding of anything other than drawing huge salaries and expenses whilst their pension pots grow at taxpayer's expense.

  • icon

    Surely if a Letting Agent is to be regulated then so should a private landlord? At least a letting agent can be held accountable through redress schemes.

    • 18 July 2019 08:13 AM

    Absolutely LL should be subject to stringent licensing and regulation.
    Good LL won't have a problem with such.
    This as it would result in many LL being forced out of business because they refuse to comply.
    That would be very good news for compliant LL.
    Means us good LL will charge more as there will be much reduced rental stock.

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    • 18 July 2019 08:06 AM

    Yep I can see there are still anomalies in the commission system.
    It is because of this that far fewer are prepared to invest in such products cos they don't trust the advisers..
    So they invest in property instead!!!
    Transparency rather than being considered a dirty word in the advice profession should be actively promoted to encourage usage of their services.
    It is why I invested in property.
    Though S24 has somewhat undone that investment proposition!!!!!
    But I would rather return my capital to a savings account than indulge in some esoteric investment.
    Inflation is low so savings value is not being massively eroded in value.
    With the Neil Woodford debacle confidence in the investment industry is let us say a little bit fragile!!

  • David Baldwin

    Agree with regulation of LA
    All Landlords should be regulated too

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    • 18 July 2019 09:19 AM

    I think we may be talking about different sorts of LL.
    Those with mortgages can't generally afford increasing LA costs.
    Unencumbered LL have the luxury of determining to dispense with 10% of their rental income giving it to a LA.

    Leveraged LL must continue to bear down on costs to maximise income.
    There is no such thing as passive income.
    Believe me if a LA fails to carry out their contractual obligations it will be the LL in court and potentially facing 5 years of passivity in a prison cell!!
    If the LA gets things wrong the buck stops with the LL.
    Trusting your liberty to an unqualified and uninsured LA is for the feeble minded passive LL.
    Only a fool would implicitly trust a LA.
    Just because things mostly run OK does NOT mean passivity works.
    LL must appreciate that they are ultimately responsible for EVERYTHING!!
    If a LA fouls up all that can happen is the LL does them for breach of contract.
    Not much use when the LL is doing a 5 year stretch because a gas boiler killed a tenant after no gas certificate was carried out by the LA!
    Passivity is for the deluded LL.

  • icon

    Do it a yourself then only yourself to blame.

    • 18 July 2019 09:38 AM

    I wonder if LL will be permitted to undertake the same qualifications as LA!?
    Don't see why not.
    Then such a LL is effectively his own LA!

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    I am surprised to see that only a 'licensed' & qualified individual will be able to conduct a viewing? Surely unlicensed staff conducting a viewing could be trained to merely show the property and to not give any advice and refer the viewing back to the office. Where will this leave companies like Viewber who have many part-time staff who carry out viewings?

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    What about sale by vendor? Will the vendor have to be licensed etc?

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    There seems to be a general assumption that landlords are good and bad. That is very wrong. Some, a third group, are downright dishonest and unprincipled. This is the group who are mostly responsible for the bad reputation all landlords seem to have. The target should be to outlaw this third group. The few just bad landlords can easily be handled with current regulation and by using the license money some councils have been extorting.


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