Labour is using a Bill currently going through Parliament as a backdoor method to introduce the regulation of lettings, estate and buying agents.

An amendment has been tabled by shadow housing minister Matthew Pennycook to enact the Regulation of Property Agents Working Group report within 24 months of the Leasehold and Freehold Reform Bill becoming law.  

It was over four and a half years ago that Lord Richard Best, chair of the working group, published a long list of radical recommendations to transform the regulation and transparency of the agency industry. A summary of the recommendations can be found later in this story.

Since 2019 the government has stated and re-stated its support for the principles of the recommendations without making any apparent progress in implementing them.

Now a Labour amendment to the Leasehold and Freehold Reform Bill to regulate property agents has been tabled following extensive lobbying from Propertymark and others on the issue.  
 
The Leasehold and Freehold Reform Bill was debated at Committee stage earlier this week after passing its Second Reading in the House of Commons on December 11.

The UK Government has stated that a ban on new leasehold houses, the end of marriage value, and a redress scheme for freeholders will be added as the Bill makes its way through Parliament.  
 
Additionally, a consultation asking for views on options to halt ground rents for current leaseholders closed on Wednesday this week.
 
Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “It is really positive to see an amendment put forward to get the recommendations in Lord Best’s report on the Regulation of Property Agents on the statute book. 

“The Leasehold and Freehold Reform Bill alongside other proposed housing legislation will bring huge change to the way people buy, sell, rent and live in property. However, currently there no minimum standards to work in the property sector and there are no statutory rules to ensure those buying, selling and managing property are suitably qualified. 

“This amendment is an opportunity to provide a greater level of protection for consumers and should be widely supported.”

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Here’s a summary of the RoPA working party recommendations: 

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).”

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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.”

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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.”

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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.”

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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.

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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.”

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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.”