At last! Victory for industry campaigners as ministers finally bow to demands for letting agents to be regulated

All letting agents across England will have to be registered under new legislation, Communities Secretary Sajid Javid said yesterday.

He made the announcement yesterday afternoon at the Conservative party conference, making clear: “We will regulate letting agents who want to operate.”

It means that the days of anyone being able to set up as a letting agent – even if they have just come out of jail after stealing deposits or have no experience of the sector – are finally drawing to a close.

It is not clear why ministers have at last cracked after many years of campaigning from within the industry itself that there should be regulation. Successive housing ministers in both Labour and Conservative administrations have either refused or failed to bring in regulation, usually citing not wanting to add red tape to the industry.

However there has been case after case of agents mis-using tenants’ deposits and failing to pay rent over to landlords, disappearing into the sunset with the public’s money while police have too often said it was a civil matter where they would not prosecute.

Until yesterday, ministers have so far been deaf to demands that letting agents should be regulated – those demands being made not in order to protect the industry, but to  protect tenants and landlords.

Tenacious campaigners have included Labour peer Baroness Hayter. Yesterday afternoon, she told EYE she was thrilled, saying: “I am delighted the Government has finally agreed to our long-held view that letting agents – who handle people’s homes – should be both qualified and regulated.

“Landlords and tenants alike will welcome this move. We will push for the earliest possible introduction of this legislation.”

David Cox, managing director or ARLA Propertymark, said: “After 20 years of our campaigning falling on deaf ears, we’re very pleased the Government has taken the decision to regulate the private rented sector.

“This will be the single greatest step forward in a generation, in terms of consumer protection for private tenants, and will do more to clean up the image of the industry than the hundreds of smaller laws and pieces of legislation introduced over the last 20 years.

“However, regulation can take different forms and we need to see the detail of proposal to be confident that it will be effective for tenants and landlords.”

There is no detail as to how exactly far the new intended regulation will go, but it looks as though organisations such as ARLA Propertymark, RICS and NALS will have an all-important role to play.

Last night, NALS boss Isobel Thomson told EYE: “The measures in the minister’s speech are very welcome news giving clear confirmation that the Government is adopting a coherent, strategic approach to the Private Rented Sector for the benefit of consumers.”

Javid yesterday said: “Currently, anyone can operate as a letting agent without any qualifications or professional oversight.

“We will change the law so that all letting agents must register with an appropriate organisation.

“This will mean that letting agents would be required to satisfy minimum training requirements and comply with an industry code of conduct.”

Private landlords are also to face regulation, with Javid announcing that they must all become members of a redress scheme – either in their own right or through a letting agent –  which will offer dispute resolution.

Javid said: “We will make it mandatory for every landlord to be part of an ombudsman scheme, either directly, or through a letting agentAt the moment landlords, unlike letting agents, are not required to sign up to ombudsman (redress) schemes.

“We will change the law so that this becomes a requirement, giving all tenants access to quick and easy dispute resolution over issues like repairs and maintenance.”

Javid also announced yesterday that new incentives will be unveiled in next month’s Budget to ensure tenancies are at least 12 months.

In addition, there new court of law, specifically dealing with housing issues could be set up, with Javid saying that there will be a consultation with the judiciary.

He said: “We will explore whether a new housing court could improve existing court processes, reduce dependence on legal representation and encourage arbitration, with benefits for both tenants and landlords. We will consult with the judiciary on whether the introduction of a new housing court can meet the aim of saving time and money in dealing with disputes.”

Javid said: “For too long tenants have felt unable to resolve the issues they’ve faced, be it insecure tenure, unfair letting agents’ fees or poor treatment by their landlord with little to no means of redress. We’re going to change that.

“We will insist that all landlords are part of a redress scheme and we will regulate letting agents who want to operate.

“Everyone has a right to feel safe and secure in their own homes and we will make sure they do.”

The private rental sector currently accounts for a fifth of all households, about 4.5m in total.

Wales – which like Scotland, has its own devolved housing powers – has already introduced the Rent Smart Wales regime, making it mandatory for private landlords to be registered and for all letting agents in Wales to be regulated. Agents must undergo training and be ‘fit and proper’ persons. Landlords who carry out any property management must also be regulated; if not, they are required to use a regulated agent.

For English agents offering both sales and lettings, there will be a question mark as to how far each of those operations will be regulated, and their compliance. Sales agents have to abide by the Estate Agents Act (which excludes letting agents) but do not have to register: lettings agents will, however, have to sign on to a central register but it seems might still not have to comply with the Estate Agents Act, which has banning powers.

 

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21 Comments

  1. smile please

    Death of the high street.

    Expect excessive membership charges and insurances.

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    1. Realitycheck97

      Sigh…

      The cost of compliance is not in membership fees and PII, it’s in doing the job properly, with trained staff, client money protection, proper systems and, yep, PII.  Although, ironically, when you get decent systems in place, you save money.  Especially because you have happy customers who don’t spend their life on the phone complaining to your staff about how rubbish you are.

      Odds are, you’re exactly the sort of agent that needs someone looking over your shoulder.

      As for death of the High St, you can’t deliver a great management service online.  Duh!

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      1. smile please

        At least your name is correct you really do need a reality check!

        If you make membership to a scheme or body COMPULSORY.

        Subscriptions go up.

        You also need to ask why the NAEA in the past few months have taken away votes for certain board members and realigned their ethos.

        Wait for pointless exams to come in. PI will go through the roof.

        Nothing to do with running an office correctly this is yet another revenue raiser.

         

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        1. NewsBoy

          Unfortunately this very good news is being undermined by concerns of increased costs for agents.  Don’t forget these costs are also being passed onto Landlords so there may well be less “private” landlords out there which is good for the public and the industry.

          We all have to pay our PI, CMP so why not pay a small extra to me a member of an ombudsman scheme. FNoPP may well be in chaos with all sorts of disputes with members and accusations of a complete lack of empathy. I am really, really not sure that ARLA is the right place for compulsory membership. TPOS looks much more secure and stable.

          However, let’s not look at a half empty glass please. This is very, very good news.

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          1. smile please

            Its a balanced view point NewsBoy and yes there will be opportunities.

            But from somebody that has seen what it did to the financial services sector, still with very close friends in the industry. I can safely say this is a pandora’s box that will lead the way to fees letting agents never knew could exist.

            What really frustrates me is there are plenty of rules in place for letting agents and estate agents to follow. If these were just enforced these fanciful ideas would not even be considered.

            Look at the likes of Robert May and PeeBee – just trying to get the basics enforced the the lack of cooperation they get and the comments on here snipping at them.

            Still at least i can say “I told you so” when a few of these liberals start moaning about the expense and tape 😉

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            1. NewsBoy

              We already have compulsion in residential sales without any need to belong to NFoPP, just TPOS. That works without horrible additional costs. Lets hope lettings follows the same line.

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              1. smile please

                Let’s hope so!

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  2. Eric Walker

    Very welcome news indeed. Let’s hope government has a plan for enforcement. I’m pleased to see tenants further protected by ensuring private landlords are members of a redress scheme and that they are regulated too. Failure to cover this element whilst regulating the industry would have been a worry.

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  3. Chris Wood

    Very welcome news however, it requires the even and properly funded policing of the industry as a whole. I would also urge Sajid Javid to go further and implement minimum standards for all agents under the 1979 estate agents act.

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  4. marcH

    Er, Eric, read the whole article 😉

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  5. Romain

    Another barrier to entry… Consumers won’t benefit. Established players will, and they are the ones who campaigned for this.

    Another blow to landlords if they are indeed made to sign up to a redress scheme. Champagne must be flowing at those schemes, though, as they may have hit the jackpot.

    This government is desperate and lacks any vision.

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    1. smile please

      Bang on the money.

      The government seemed determined to destroy the PRS yet are not prepared to invest in social housing.

      Landlords now covering the cost of tenants fees, having to pay enhanced stamp, loss of mortgage relief are also now going to have further costs pushed on them by way of pointless membership and exam fees pushed onto letting agents.

      I have been a supporter of the conservative party, today i will be cancelling my standing order to the monthly donation i make to the party.

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      1. Richard Copus

        Smile Please  –   Exams are NOT pointless.  This is the normal response from people who can’t be bothered to spend a bit of time studying for them and taking them.  They give essential foundation knowledge which can’t be picked up as you go along and are recognised as proof of a degree of competence.  Every other recognised profession has exams as a condition of entry and they are long overdue in ours.

        The team leader of Powys trading standards spoke to a group of west country estate agents a week or so ago.  In his speech he said that estate agents are now expected to read through and understand the leases of properties they are selling and also to take copies of titles deeds and understand the meaning of covenants contained in the title. These among other things. He agreed that a minimum standard of competence was now necessary for estate agents. It’s a future that’s now upon us and should have happened years ago.

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        1. Chris Wood

          “He agreed that a minimum standard of competence was now necessary for estate agents. “

          Did James make that as a formal statement or just in passing Richard?

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        2. smile please

          Exams are NOT pointless.  This is the normal response from people who can’t be bothered to spend a bit of time studying for them and taking them

          With respect thats cr*p- I am probably more qualified then most, putting myself through qualifications that mean something and i still think its a waste of time.

          Just because you have a qualification, it does not mean you are any better at the job.

          Some of the worst agents i have ever worked with have the homemade ARLA and NAEA qualifications.

          Look at the FS industry, Many good individuals have left, taken early retirement as they do not want to pay the on going extortionate fees and the never ending pointless exams.

          The problem with most estate / letting agents is they have no clue about business and how the outside world works. We see it time and again.

          You wait until you have to employ an XYZ qualified compliance manager  – They do not know their ar** from their elbow, none of them available so you have to pay them well over the top for what their role really is.

          Wait until you have to employ only XYZ negs or listers so the pool of talent is reduced and your staff costs go up.

          Wait until you find out the regulators only impose guidelines not rules, then see how quick they fine you because you misinterpreted the guidelines.

          AND STILL FIND OUT THERE ARE AGENTS DODGING THE RULES!

          The only agents that should be rejoicing are the large corporate agents. The rest are in my opinion misguided fools.

           

           

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          1. biffabear

            What he said.

            Regulating anything is a Money Making exercise.

            Recently, I went to Spanish lessons.

            Was handed a piece of paper which she said was the most important document. We must read it, memorise it and always have it on our desks in-case of an inspection.

            Urgently looking at this document, wondering, how it could be so important.   It was, about diversification, respecting each others religion and other pointless paperwork gobbly-de-goop.  Dreamed up by some jobsworth.

            I remember years ago, a Council official handing me a sticker, saying this is the law, I must have this in the window. A no smoking sticker, when my premises had always been no smoking. Rules for the sake of rules.

            This is the route the Country is going down.

            If there are bad agents out there, deal with them, you don’t have to bury us all in regulation.

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  6. KByfield04

    The usual scare-mongering of what this could mean when most, if not all, legitimate, professional, full-service letting agents will/should welcome this with open arms. Professionalising the industry should actually drive down PI costs. This will also eliminate the terrible letting agents out there who get away with ignoring/flouting laws (due to non-existent enforcement) until something goes wrong- and then they go bust (or worse) damaging all of our reputations.

    What, in my mind, is essential is that the membership/licensing fees paid are ring-fenced (at least in part) and must be reinvested back in to strict, pro-actove enforcement backed up with a structure that (in minor cases of breach) facilitates retraining with close monitoring and for serious breaches immediate expulsion.

    As a single office independent I totally dismiss the cries of ‘this only serves the incumbents’- nonsense, this serves the professionals. The evolution of tech (and ongoing evolution of this) will continue to make compliance easier and easier to adhere to with limited costs incurred by users. What is more, goven they already do the hard & costly but of cmplying (due to man hours) I imagine this will be a welcome recognition. Those Landlords using criminal enterprises will have to switch to legitmate ones- rewarding quality agents with an uptake in business.

    As for an ombudsman for Landlords, really about time too- this can easily be applied without the need for mandatory licensing (although this may make things more transparent). With 4.5 millions homes rentd and this set to soar over the coming years, charging just £10 per tenancy for Landlord membership would generate ample imcone to fund the organisation whilst avoiding a high cost to Landlords who are already burdened by changes.

    Talking to our Landlords (and I wonder how many agents on here have done so- especially without applying their own string opinons n the matter) almost all of our welcome this move. They resent the fact that they are fully compliant when other landlords choose to breach and see this as professionalising of their industry which is good for all legitimate offerings.

    The reality is, this will mean rent increases to Tenants, especially in low rent markets, especially when combined with the letting fee ban but that is the price that must be paid for better standards and framework. I for one am excited about this- lets just hope Sajid outlasts the average Housing MInster seat of around 6 months (what are 11 HMs in 6 years ever going to achieve) and actually has the time to implemenet this and that at least some consultation will be done with various parties to ensure a workable framework is applied.

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    1. Chris Wood

      What he said

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  7. Richard Copus

    Hi Chris,

    I spoke to him afterwards and suggested that what he was asking for required a minimum standard of competence as most agents were not quailfied or experienced enough to deal with quasi-legal and legal documents.  He said that he could see difficulties with compliance if one were not put in place soon.

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    1. Chris Wood

      Sounds promising. (Dons helmet)

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  8. RobMills21

    At last…….it is the only way to tidy up this industry.

    Of course, as long as the right people are put in charge!!!…..no good having someone who has worked outside the property industry running things! Also will require a group of people not just one person either, you need to know about many different aspects as lettings involves many different areas not just ‘letting a house and creating some sort of agreement’. Whomever deals will need to have proven experience within the Lettings Industry/Tenancy Law/Insurance/H & S and so on…..

    It will be interesting to see how things develop and who gets invited to be involved!

     

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