Agents’ trade body Propertymark says the current debate on the Leasehold and Freehold Reform Bill is another example of how agent regulation would benefit both the industry and consumers generally. 

The Leasehold and Freehold Reform Bill aims to make it cheaper and easier for more leaseholders to extend their lease, buy their freehold and take over management of their building as well as ban the sale of new leasehold houses.

During the debate former Housing Minister Rachel Maclean MP said: “There is a need for regulation of the property management sector more broadly…. I urge the Minister to continue to push ahead with a reform that must happen, if not on this side of a general election, then on the other side.” 

Other MPs raised concerns about improving consumer service and the role of managing agents within leasehold blocks including Sir Peter Bottomley MP, Chair of the Leasehold and Commonhold Reform APPG, who said: “Given that some managing agents are very large and people’s experience of them is not very good, we ought to try to make sure that there is not this continual amalgamation and that there is a good choice of good managing agents that want to earn a better reputation.”

Propertymark is campaigning for the regulation of property agents and on the issue of leasehold reform with research released in 2018 shining a light on the issue.

It says that to igive more rights and protections to homeowners, reform is needed in several areas, including:

– Introduce overarching statutory regulation of property agents – for sales, lettings, managing agents and sales staff selling property for building developers there are no minimum standards to work in the sector and there are no statutory rules to ensure those buying, selling and managing leasehold property are suitably qualified.

– Phasing out leasehold on new flats – if the UK Government is serious about doing away with leasehold, then they need to ban leaseholds on all new flats as well as all new houses.

– Mechanism to identifying and contact freeholders with offences for failing to respond – property agents report difficulties in getting hold of the freeholder during sales processes or when leaseholders need to get in contact with the freeholder to approve home alterations or to discuss issues with the lease which slows down the sales process.

– Implement a code of practice and disclosure document concerning Event Fees in specialist retirement developments as drafted by the Law Commission in March 2017 – companies that own or manage specialist retirement properties, usually flats owned on a long leasehold basis, often include a clause in their lease agreements requiring owners to pay an “exit” or “transfer” fee when they wish to sell or rent out their homes.

– Extend Flood Re to the leasehold sector – Flood Re is a levy and pool system in the UK, which replaced the Statement of Principles agreed between the Government and insurance companies to provide flood insurance coverage to domestic properties deemed at significant risk of flooding. The Flood Re obligation currently excludes the Private Rented Sector and the leasehold sector.

Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “The Second Reading debate of the of Leasehold and Freehold Reform Bill has clearly highlighted the need for regulation of property agents and for the UK Government to look seriously at implementing the recommendations in Lord Best’s report. Overarching regulation of the sector is needed to support these reforms as well as proposals to change the private rented sector under the Renters (Reform) Bill. 

“Regulation of property agents can protect consumers from bad practice and support businesses, ensuring fair competition and a level playing field for all. Propertymark will continue to make the case for regulation as the Bill makes its way to Committee Stage.”