A clause in the new Housing and Planning Bill, requiring all letting agents to offer Client Money Protection, has been withdrawn after opposition by no less than the housing minister.
He said it would be too much red tape.
Last night, ARLA described the move as “very disappointing” and said it would fight on.
The Clause had been proposed by Teresa Pearce, Labour MP for the London constituency of Erith and Thamesmead.
She said there was industry support for such a measure.
EYE has tabled a petition – on November 27 – on the Government website, calling for mandatory CMP.
Pearce said: “The new clause is designed to protect both parties in the unlikely event that an agent goes into administration or misappropriates the client’s funds.
“Any losses could be recovered through the scheme.
“The Bill’s extension of banning orders to letting agents has acknowledged that there are times when letting agents do not act in the best interests of landlords or tenants.”
Housing minister Brandon Lewis said he was aware of some support in the housing sector for this measure.
He went on: “We want to ensure that we have a strong and thriving private rented sector that is not tied up in excessive regulation.
“Requiring agents to pay to belong to a client money protection scheme would force honest agents to buy insurance against the risk that they themselves were fraudulent, when, as the hon. Lady said, the vast majority of agencies are not.
“Introducing a mandatory Client Money Protection scheme at this point would be a step too far and would overburden a market that is perfectly capable of self-regulation.
“However, in May 2016 we will review the impact of the transparency measures that were put in place only recently.
“At that stage, I will take due consideration of whether any further action is needed, and obviously I will take into account the comments made this afternoon. I hope that, with those points in mind, the hon. Lady will withdraw the new Clause.”
The clause was duly withdrawn, in a briefing document that few will have seen.
Last night, ARLA managing director David Cox said: “It’s very disappointing the amendment requiring all letting agents to have Client Money Protection has not been successful; especially when so many organisations from across the industry were supportive.
“However, we are pleased the minister has agreed to review the issue again in May.
“We should not be disheartened as it is a positive step that Client Money Protection is now firmly on politician’s radars and being discussed at the highest levels of Government. ARLA will continue to fight for mandatory Client Money Protection as a step on the road to a more appropriately regulated lettings industry.”
As reported yesterday on EYE, the debate on the committee stage of the Housing and Planning Bill lasted a marathon six hours, finishing at 3am yesterday morning.
Some MPs were said to have been tired and slurring their words, with others saying it was a return to the bad old days of all-night sittings, and that it was wrong that important decisions should be taken in the early hours. There were a large number of new government amendments, with some going uncontested – a mark, said critics of the late-night sitting, of MPs’ exhaustion.
The EYE petition on the government website has so far garnered 1,241 signatures – far fewer than we had expected, although it runs until May 26.
So, have we got it wrong? We see this as an important reform in the interests of consumers. But we could be mistaken.
That said, we have certainly reported on cases where agents have scarpered into the sunset without any protection for the landlords and tenants who have been the inadvertent losers.
Your views would be welcome, since with the housing minister’s opposition it would appear that the main assistance consumers can get regarding the safety of their money is via the voluntary SAFEagent scheme.