New era of regulation for the entire industry is unveiled today

A new era for the entire agency sector begins today, with the publication by the Government of a report calling for minimum standards, a single code of practice, and licensing of agents, with the regime to be overseen by a new regulator.

Agents have been urged to start preparing now for the new era.

The official report, from the Regulation of Property Agents working group and published today, is far-reaching, covering lettings and sales, auctioneers, rent to rent providers, property guardians, international property agents, and online-only firms.

The new regulator would also have powers over the leasehold sector.

The new over-arching code of practice will be enshrined in statue, requiring agents to act with honesty and integrity. Underneath it, regulatory codes will operate, specific to different activities.

The new regulator – the report says that no existing body should take on the role – will be accountable to the Secretary of State and be funded by the firms and individuals it regulates. Importantly, the new regulator will have the power to appoint a single ombudsman if it believes this would be better than having “competing redress schemes”.

The regulator will have the power to issue warnings, revoke licences and prosecute unlicensed practitioners.

On licensing, the report says: “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.”

The report also suggests that once the regime has settled, it could be extended to cover self-managing landlords, developers, Right to Manage companies, and possibly tenancy deposit and client money schemes. However, the report says that regulation should not extend to property portals such as Rightmove or to the short let sector, such as Airbnb.

Propertymark said it heralded a new culture for the industry.

Mark Hayward, NAEA chief cxecutive, and David Cox, ARLA boss, said in a joint statement: “This is a significant moment for those in the property industry and a huge leap forward in stamping out bad practice.

“We have long called for Government intervention to ensure everyone in the industry is licensed, adheres to a strict code of practice and holds at least a Level 3 qualification (A-level).

“Following the extensive considerations by the working group, it is now for Government to create the structures for a properly regulated industry, whose professional knowledge and skills are trusted and respected by all.

“These are substantial changes which will require agents to start making preparations now to ensure that they are well placed for when these proposed qualification requirements are introduced.

“While we anticipate that the need for property qualifications will be phased in, we advise agents to get ahead of the competition and to stand out by adopting the new requirements early.

“It may feel like this is in the distant future but bringing every property agent into a new regulatory regime will involve a significant change in culture across the industry.”

Isobel Thomson, chief executive of safeagent, formerly NALS, described the report as “a blueprint for a professional regulated property sector which, if fully implemented, would ultimately offer consumers the same level of protection they already experience in other areas of their everyday lives”.

She added: “We also welcome the focus on the need for effective enforcement which has always been the missing link when it comes to delivering what new regulation promises.”

The report recommends that the short let sector is not encompassed in the scope of any new regulator but Thomson warned there should be a focus on this area of activity as consumers are vulnerable and potentially at risk if it sits outside regulation.

The National Landlords Association also welcomed the report.

CEO Richard Lambert said: “We hope that the proposals outlined in the report will drive forward the professionalisation of the private rented sector, making it a better place for those who live and work in it. We were particularly pleased that the report went beyond simply looking at activities and placed a new emphasis on the importance of ethics and behaviour.

“But the new regulator will be toothless if the Government continues to fail to provide the resources to enforce existing legislation, let alone any new requirements.”

The Government set up the Regulation of Property Agents (RoPA) Working Group – chaired by Lord Best – last November.

It said this morning that it will review the recommendations and “respond fully in due course”.

Housing minister Heather Wheeler said: “Everyone should be able to have full confidence in their property agent when selling or renting a home.  Whilst the majority of agents offer a good service, it’s high time we take action to tackle a minority who are letting the sector down.”

The report is here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/818244/Regulation_of_Property_Agents_final_report.pdf

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49 Comments

  1. MillicentBystander

    Does it include Buyers agents too?

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  2. spin2009

    If it walks like an agent….,,,,,,,,,,,,

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    1. Bless You

      Tax it

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  3. bren_gun

    LPE’s need level 4 perhaps? That should make this level as presumably their self-employed status is akin to directors?

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  4. ArthurHouse02

    All those lauding this are crackpots or just want a piece of the pie. The laws and regulations exist already to fine and prosecute estate agents that are behaving illegally, but trading standards etc just constantly choosing to do nothing in most cases. Why should this be funded by those it seeks to regulate? If it is where is the motivation for those sitting on fat salaries to actually do any work.

    Just another yearly subscription for no benefit to proper estate agents or people moving home.

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    1. Realitycheck97

      Crackpots?  Rude. And wrong. This knee-jerk dismissive disdain shows exactly why behaviours need to be regulated and individuals qualified, competent and licensed.

      You wouldn’t get into an unlicensed cab. Why should consumers be expected to gamble on whether their agent or property manager, who is responsible for their safety, their money and their biggest asset, is actually fit and proper and able to do the job?

      That’s not crackpot. That’s protecting the consumer. Which is your job. Or do you fear your ability to pass a test and be held accountable?

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      1. ArthurHouse02

        Does getting into a licenced cab ensure that the cabbie will take the shortest or correct route, not get lost or over charge you? No it doesnt. This will not protect the consumer from anything further than the laws do today. Estate agents that arent that great will still operate but they will be quailfied. As i stated above the laws exxist today to punish estate agents but nothing is done
         
        *EDIT* As a more relevent example, solicitors/conveyancer are heavily regulated, but it doesnt stop some of them being rubbish and not adhering to a decent level of practice. People reading this forum will be able to name many a firm of solicitors that are awful to deal with, but although their customer service is horrenous, they act completely legally.

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        1. Property Ear

          Well said Arthur

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        2. revilo

          Exactly!

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        3. ALOnline

          Regulation isn’t brought in to make sure Estate Agents stop lying about getting into a ‘little shunt’ so that they have an excuse not to turn up to an appointment.
          It’s in place to make sure that they are fit and qualified to do the job that they are asked to do.
          It’s to help prevent all properties’ values being inflated by 15%.
          It’s to stop EAs getting away with being involved in their own sale, ripping off their purchaser in the process.
          It’s in place to make sure they check all buyers’ funds and carry out all AML checks.
          It’s in place to make sure that EAs who get caught stealing, harassing or assaulting their customers never find work again.
          At the minute, Estate Agency is still largely a dishonest syndicate comprised of family members and friends who look after each other at the expense of the customer (tell me I’m wrong). It’s much more difficult to get away with this kind of rubbish when you have an official audit of your dealings and are threatened with a £10,000 fine if you get caught.
          The point is that not all Estate Agents do act completely legally, in addition to the rubbish service they give to their customers.
          Regulation is a necessary step in an archaic system of business.

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          1. AgencyInsider

            ‘At the minute, Estate Agency is still largely a dishonest syndicate comprised of family members and friends who look after each other at the expense of the customer (tell me I’m wrong).’
            I’m telling you. You’re wrong.

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            1. ALOnline

              I’m sure that there are many people who don’t fit this mould. However, I came from an industry that was regulated. Moving from that to working with EAs was the biggest culture shock of my life.
              Having the standards of never lying to a customer, always taking responsibility for your actions, always doing the right thing, never blagging your way if you don’t know the answer to a question.
              I’ve still only met a handful of people (out of working with 100 ish EAs so far) that actually practice any of these values. A 90% fail rate is an indicator of a rotten tree and not just a few rancid apples.

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          2. CountryLass

            I agreed with you until you said it is still LARGELY a dishonest syndicate. No, it isn’t many of us are trying to navigate the tangled web of getting everything done in the best interests of our client, whilst not being unfair or dishonest to the buyer, hampered by changing regulations and whims of solicitors, mortgage lenders, surveyors and any other person involved in the transaction.

             

            Yes, there are some dishonest agents out there. There are also crooked police officers. Incompetent solicitors. Sadistic dentists. Unkind teachers. Useless doctors. Does that mean that all of them are? No. But all of them have a regulatory system in place to deal with them when they are brought to the attention of those charged to make sure that they are performing their job with honesty and integrity.

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            1. ArthurHouse02

              But as i said above, we already have laws in place to punish those acting illegally, but nothing happens. How many agents are trading without being a member of an ombudsman scheme, how many agents kicked out of an ombudsman scheme are still trading, how many agents accused of not lodging tenants deposits were fined or closed down….i could go on.

              Bottom line is estate agents that break the law will still do so, but have letters after their name. Nothing will change because the authorities who could do something either cant be bothered or dont have the man power. This would be just another tax for zero benefit to the public

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    2. Mothers Ruin

      Couldn’t agree more. We’re already qualified and follow the EA Act to the letter. I’m fed up to the back teeth of paying for others to do things properly when they won’t anyway. AML fees have gone up SafeAgent fees are going up we already pay for TPO ARLA/NFOPP and now we’re going to have to pay for another regulatory body. They could get rid of the cowboys right now with the legislation in place but it doesn’t seem to happen. The good guys always end up paying for the bad guys.

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  5. Will2

    I guess similar standards should be introduced for government, charities and local authorities to stamp out councils and certain charities inciting contempt of court when advising tenants to stay until bailiffs attend evictions ignoring dates given in court possession orders.

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    1. pierce

      Slightly off topic but the fact parish councils are unregulated (more or less) leaves them them open to do what the hell they like. Is there anything to rectify the position where public money can and is used badly? Probaly not…

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  6. Ostrich17

    A couple of things in the report suggest that this may not bode well for the likes of PB:-

    1. Those conducting regulated activities ( e.g. Viewings ) will have to be licensed/qualified.

    2. Complaints by other EA will be dealt with by the new Regulator.

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    1. ArthurHouse02

      That is a very good point Ostrich. Anyone engaging if estate agent activities should be regulated. So viewber needs to fall under this remit

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  7. htsnom79

    Can’t see it happening myself, tenant fee ban was about taking something away this is about introducing something, there will be one or more changes of government/minister in charge, Brexitit or no Brexit and all the fall out from that, we’re just entering a slowdown after a decade of price inflation, oh and they left out rightmove (thanks for that working group)

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    1. CountryLass

      Probably because RM is seen as a platform, not a performer if that makes sense. But they should have to comply with the regulator and make sure that all those listing on there are licensed, report any attempts to list wihtout a license and be able to be fined if it is found they have allowed unlicensed agents on there. So they shouldn’t have to be licensed, but all of the portals should still be answerable to the regulator, and if enough serious infractions are brought against them, then the regulator should be able to take action.
       
      And AirBnB should come under that too. One of my colleagues found a room in a house that she was managing on AirBnB. We managed to get it removed from there and served notice on the Tenant immediately!

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  8. Property Ear

    Good to stamp out cowboys but this could be the death knell for some honest agencies who already operate in a professional manner and abide with current legislation. With existing regulations demanding we pay for and abide by an ombudsman redress scheme, Money laundering laws and HMRC demanding more money with time consuming responsibilities, combined with a worrying low supply of instructions and sales with disrupters eroding commission rates how the hell can an agent have the time and income to survive. Makes the blood boil.

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  9. andrew.stanton

    Having just read the 56 page report, it seems based on the premise that as the general public do not ‘trust’ estate agents and property professionals there is a need to regulate.

    Lord Best who oversaw the report I know has a major background in property matters – but not perhaps a working knowledge of the industry at ground level.

    Apart from the obvious new levels of red tape, the cost of the new regulator to be paid for ultimately by the agents and property professionals, and the cost for training that the new report calls for, which once again will hit the profitability of all agents, I am struck that the report is saying that the present bodies who regulate the property profession are not fit for purpose, not really a ringing endorsement for those hardworking people.

    Given the government has not resolved Brexit, after three years, I think that this issue of more regulation for the property industry may well be kicked into the long grass as other more pressing issues come to the political fore. especially after next Monday evening.

    As a person who helps and develops agency businesses I am all for training and professional standards and codes, but – why does the government want to add more regulation to the property sector? Should car sales people, double glazing sales people and MP’s not also have extra regulation based on the same premise that this report has, that a low percentage of folk do not trust them.

    Many MP’s when elected have zero training or competency of being an MP, and yet they make decisions from the first day they arrive at the house, decisions that have ramifications for their constituents, maybe they need to have formal qualifications and annual tests to prove they are a ‘fit’ person as detailed in Lord Best’s report on estate agency professionals.

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    1. ALOnline

      I care more about losing £15k on the sale of my house than how regularly my bins are collected, in honesty. A property has a much greater financial and emotional investment from most people than anything else.
      In my opinion, if there was a potential that an EA could be blacklisted from ever working again by the regulator, less EAs would behave as they do now.

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      1. pierce

        “In my opinion, if there was a potential that an EA could be blacklisted from ever working again by the regulator, less EAs would behave as they do now.”absolutley!

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  10. AgencyInsider

    Pound to a penny this will not be enacted within the next 5 years or more.

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  11. mattfaizey

    Slightly off topic,

    Maybe the individuals who I know will read these comments could possibly start looking at movers next…

    In the same way, it’s full of cowboys, and in our case black economy too. Not too mention hugely dodgy practices.

    So come on, let’s regulate moving companies next please

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  12. undercover agent

    Forced qualifications, like forced trade bodies and licensing schemes, are all forms for central planning. When will governments learn that central planning doesn’t work out well for the people? It just hands more power and jobs to  bureaucrats that are far removed from the everyday transactions they influence with their “one size fits all”  standardisation.

    History can show us the effects of this. In the past governments have enforced other industries get qualified, including butchers and hairdressers.

    The effects are well known; raising the bar for entry into the industry reduced competition, which reduced service levels and increased prices to customers, because consumer choice was reduced.

    You might think that’s good news for agents that are over the bar, even if it’s bad new for agents under the bar, bad news for new agents and bad news for customers. If that’s what you’re thinking then not only might you want to question your moral compass, but you might want to ask how it ended for “over the bar”  incumbents. The answer is it ends badly. We all know that companies with monopolies might get a boost to profits in the early days, but it’s not long before the lack of  competitive pressure makes them slow and inefficient, reducing profits and making them easily beaten when the governments realise their mistake and the rules shift again.

    If you want good quality sausages from a butcher or a good quality haircut from a hairdresser (at a good price), look for competitive markets where the business you’re buying from has to compete to survive.  That will give you a better customer experience than buying from the only butcher in town, even if that butcher has a very impressive qualification that other butchers couldn’t get.

    You only have to travel to other countries to see the effects of different levels of regulations for yourself firsthand.

    The nanny state obviously doesn’t think consumers are discerning enough to make their own decisions right now, so get qualified ladies and gents, even if you only work part-time, or go work in a different industry for a while. This is a sad day for us all.

     

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  13. Lofty

    Hopefully the new PM will do away with this nonsense before it enters law.  More regulation won’t help consumers, it’ll just force lots of agents out of business and be a barrier to entry into the industry.  No wonder ARLA are pleased, they can charge even more to members and create the closed shop they’re aiming for, whilst at the same time continuing to woefully represent the industry to government and the public.

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  14. SamH

    A case of running before learning to walk. Licencing is a good thing IMO. But please (if you’re reading, Gov) make it easy. Start really simple, look at how it’s going and see what lessons were learnt before adding the next steps. Licencing (and mild regulation) will add a layer of perceived professionalism from those outside looking in, but the great agents will still be greats and those causing most of the headaches for the industry will still do so with a piece of paper framed in their office

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  15. Property Poke In The Eye

    Don’t panic people.  If Brexit takes about 5 years to sort out this will take about 25 years.

     

     

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  16. El Burro

    Looking at the responses so far there seems to be one part of the equation that is largely escaping comment and that’s the consumer.
     
    We are responsible for handling their most valuable asset, their property. Surely they should expect that to be dealt with someone that meets minimum competence standards?
     
    At the moment you could be selling tat at a flea market on Saturday and start valuing properties on a Monday.
     
    Will it be perfect no, but if stops the parasites jumping in as soon as there’s a decent market is that a bad thing?
     
    As to the cost to us, the new TPOS code requires a Land Registry search on every instruction, do the maths. I don’t recall that getting too much comment on here.

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  17. MarketLeader101

    A qualification to become an estate agent (or something of the sort), is something this market has needed for decades.  I cannot tell you how many moronic, young, stupid, unqualified, uneducated liars I’ve come across besmirching the world of estate agency.

    A few agents behaving badly, or not being good at their jobs should tarnish the whole sector, but this will help weed it out!

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  18. Hillofwad71

    Where does that leave EWEMOVE  where many of the franchisees not only have  zilch  property qualifications but zero estate agency experience either? 
        The regulations arriving too late for many of those who took a leap into the unknown, already disappeared the consequences for many  have been to be saddled with life crippling debts which will be hanging around their necks like millstones. 
    No RICS Lionheart scheme to help them !
    Fomer gardeners . army servicemen. retail mangers ,mobile phone salesmen  will  be looking back on their former careers fondly.  
     Looking today at a number of the franchisees accounts  at Companies House who are still trading , it doesn’t make pleasant reading.
      Debts increasing with insufficent  instructions to service them . 
    A franchisee in the  South currently carrying a deficit of £200k !
    SOUTHAMPTON
    Like Chelmsford not just 1 but 2 failed franchises SOUTHAMPTON NORTH  struggled on from 2014-2018   RIVER  HAMBLE took up the baton ,  lasted just 1 year .   The franchisee having worked in retail at Marks &Spencer ,Debenhams and B & Q with  no previous estate agency  experience. He never really  stood a chance !

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    1. AgencyInsider

      You really do need to give your spellchecker a darn good talking-to.

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      1. AgencyInsider

        Ah, I see you have.

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  19. Richard Copus

    El Burro and Realitycheck 97  –  I agree entirely.

    Mandatory regulation was enshrined in Section 22 of the Estate Agents Bill 1979 (for a quick view of this section see PIE 10th April last year).  The bill was drafted by the then Labour Government and this section did not receive royal assent because the new Thatcher government was wary of any form of regulation which might damage a return to entrepeneurship.

    You won’t need the IQ of Einstein or memory of The Chaser to pass the tests that will be required to practice and a positive licensing scheme will definitely discourage more than a few fly by nights from entering the profession.  I really cannot understand the logic of anyone who disagrees with this when they know we are dealing with people’s most valuable asset and we have a very high duty of care to them.  There will be grandfathering in for those in the industry currently practising, so what’s the problem?

     

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    1. pierce

      I love the chase!

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      1. El Burro

        Looking at some of the comments on here, Pointless springs to mind!

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        1. ArthurHouse02

          To clarify, i’m not against it because i dont want standards improved, i’m against it because in my opinion that wont happen.
          The powers that be will want the exam or whatever to be as easy as possible to pass, thus encouraging many people to part with their £50, £100, £500 etc. This isnt going to be a highly skilled exam for those of us with deep experience, they will want there to be a chance or someone starting today to pass it.
          I expect one question to be 5) A room with the cooker in is called a K*TCH*N….

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  20. landadvice28

    IT IS A NONSENSE to “Prepare yourself now”.

    If anyone cares to read the report they will see that a syllabus for Training has to be approved by the Regulator …….. WHO HAS NOT EVEN BEEN APPOINTED YET!!!

    Some unethical training Providers will try to separate people from their money and not be able to provide the required service.

    SHAME ON THEM

    Dave Absalom

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    1. markus

      Especially as Lord Best already said ‘no grandfathering’.

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  21. Itsallajoke

    Dare i say but we have been ‘hung out to dry’ by Mays government & the Osborne era- i never would have thought it but here we are.

    Legislation after legislation after legislation. Its seems like every month , there’s something else thought up to hammer the agent / letting agent, somebody putting their ‘fist ‘into the pie.Get your own house in order first !!!- I definitely agree with politicians being qualified / experienced in their field to run a government department-

    Saying that – there should be a minimum requirement for people wishing to work in the property industry with no experience / training at all. ie 12 months apprentice training / with final exam. That could work for politicians as well.

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    1. pierce

      Good point!

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  22. Woodentop

    The industry is already regulated with rules, regulations, codes of practice, ombudsman. A licence will not protect the consumer, dishonesty is a mind set and prisons are full of highly qualified people from all sectors of industries. The fault lies with ineffective policing: Housing minister Heather Wheeler said:  …… Whilst the majority of agents offer a good service, it’s high time we take action to tackle a minority who are letting the sector down. That is the problem, there is no justifiable evidence to support the industry is rife with malpractice or need for licensing.

     

    Maybe its about time government officials, civil servants and MP’s that make these decisions had to be licensed! Now there’s a thought.

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  23. Scottish_Mist42

    As a Scottish agent who has already gone through this I believe this is a positive move for the rest of the UK.

    The critical thing however will be ensuring there is sufficient resources to enforce it.  If not, it will be a waste of time.

    In Scotland it’s believed (based on the scottish governments own estimates) around one-quarter of agents have still to submit an application, and are therefore trading illegally.  I am not aware, although happy to be corrected, of legal action being taken against any of these non-compliant agents.

    At the moment it feels like the agents. who always flout the laws, are getting away with it again!

    Therefore I fully support the aims of this, but it must have teeth!

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  24. JEL

    most agents I come across are professional, honest and want to do a good job without any need for added regulation, still I suppose Propertymark will lap it up and make us all feel like naughty school children

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  25. GeorgeOrwell

    I come to this particular topic very late today, because I have been very busy on behalf of my clients

    Forgive me, when “Lord”? Best and other politicians, committees etc start dishing out proposals for regulation I can’t help but ask/demand “Who regulates these clowns when they arrive in the circus that is our government”

    There is not enough air to fill my lungs for a thousand lifetimes to condemn the lack of accountability of those that “Lord” it over the masses. Start with websites like “theyworkforyou.com” and you can judge their performance of behalf of you, the public, the taxpayer, the voter

    I’ll say this. Dear Government, instead of p@ssing about tinkering around the edges of “regulating” certain professions, get yourself publicly regulated and accountable. A shining example of our government failure at the fundamentals of our once great UK is the demise of the Police Service of the UK, as you have broken it with lamentable cuts, grossly inadequate funding and a complete lack of understanding of the fundamentals of UK society

    Also, every single government mp should be employed to work solely for the UK, no if’s, but’s, exceptions. Drop all the lucrative extra jobs and work for us, the UK public, taxpayer, voter – then, just then, you might earn the credibility and grace to start passing judgement on “the masses”

    I may be an Estate Agent with all the associated connotations however I stand head & shoulders above Politicians. Many Politicians are shining examples of Hypocrites

    I’ve looked up your record of public performance tonight Lord Best and I am far from impressed, although your ability to Lord it over others through various committees is commendable. Enjoy your pension Lord Best, because I will have contributed to it through my hard work/tax payments!

     

     

     

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  26. Chris Wood

    I, along with many others on here, spent their entire careers working towards this day. This is good news.

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