Within the current legislative landscape, the Labour party is leveraging a Bill in progress through Parliament as a strategic avenue to introduce regulatory measures for lettings, estate, and buying agents. The focal point of this initiative is an amendment put forth by shadow housing minister Matthew Pennycook. This proposed amendment aims to operationalize the recommendations outlined in the Regulation of Property Agents Working Group report. If approved, these regulations are slated to take effect within a span of 24 months from the enactment of the Leasehold and Freehold Reform Bill.
Matthew Pennycook’s amendment represents a deliberate step towards reinforcing oversight within the property industry. By aligning with the recommendations of the Regulation of Property Agents Working Group, Labour seeks to instill a regulatory framework that addresses various aspects of the real estate sector. The proposed timeframe for implementation, set at 24 months post the Leasehold and Freehold Reform Bill’s enactment, underlines a commitment to timely and effective regulatory measures in the property domain.
Over four and a half years ago, Lord Richard Best, who chaired the working group, laid out an extensive list of radical recommendations designed to revolutionize the regulation and transparency of the agency industry. This marked a significant moment in the ongoing efforts to reshape the landscape of property-related services. The subsequent sections of this article will provide a condensed summary of these recommendations for a clearer understanding.
Despite the government expressing support for the principles outlined in Lord Best’s recommendations since 2019, little tangible progress has been observed in their implementation. The industry has been left in anticipation of concrete measures to enact the proposed changes and enhance regulatory oversight. The prolonged delay in execution has raised concerns within the sector about the efficacy of these long-awaited reforms.
Now, in response to persistent advocacy efforts from entities such as Propertymark and other stakeholders, the political landscape is witnessing a notable development. A Labour amendment to the Leasehold and Freehold Reform Bill has been officially tabled, introducing a potential avenue for the regulation of property agents. This move comes after extensive lobbying, indicating a proactive stance towards addressing the concerns surrounding the lack of regulation in the property agency sector.
The Leasehold and Freehold Reform Bill underwent Committee stage discussions earlier this week following its successful Second Reading in the House of Commons on December 11.
As the Bill progresses through Parliament, the UK Government has outlined its intentions to incorporate key measures, including a ban on new leasehold houses, the cessation of marriage value, and the establishment of a redress scheme for freeholders.
In addition to these proposed changes, a recently closed consultation sought opinions on potential options to cease ground rents for existing leaseholders.
Expressing optimism about recent developments, Timothy Douglas, Head of Policy and Campaigns at Propertymark, highlights the positive move of introducing an amendment to solidify the recommendations from Lord Best’s report on the Regulation of Property Agents into law.
“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.”
Here’s a summary of the RoPA working party recommendations:
– New Regulation Scope: The recommendation proposes extending regulation to encompass various entities involved in property agency work, including auctioneers, rent-to-rent firms, property guardian providers, international property agents, and online agents. However, this regulatory scope excludes property portals like Rightmove and Zoopla, as well as the short-let sector akin to Airbnb-style arrangements. The suggested legislation should, nonetheless, allow for potential future extensions, such as incorporating landlords, freeholders, developers, retirement housing managers, and Right to Manage companies.
– The New Regulator: The proposal advocates for the establishment of a new public body as the regulator, asserting that no existing entity is deemed suitable for this role. The recommended regulator should adhere to fundamental principles of good governance, including independence, openness, transparency, accountability, integrity, clarity of purpose, and effectiveness. Operating under the governance of a board, the regulator would be accountable to the Secretary of State for Housing, Communities, and Local Government. It is proposed that the regulator takes over the approval of property agent redress and client money protection schemes, with the authority to appoint a single ombudsman for property agents if deemed beneficial for enhancing standards. The regulator should be empowered to consider complaints from various sources, including solicitors, lawyers, or other professionals providing evidence of potential illegal agent behavior.
– Licensing: The recommendation underscores the necessity for property agencies and qualifying agents to hold and display a license to practice issued by the new regulator, verifying appropriate qualifications and credentials. Before granting a license, the regulator should conduct checks to ensure legal obligations are met, such as affiliation with a redress scheme and submission of annual audited accounts. A fit-and-proper person test should also be administered. The regulator is proposed to have the authority to modify licensing conditions as deemed appropriate, maintaining accessible records of licensed property agents.
– Codes of Practice: The recommendation emphasizes the implementation of codes of practice to establish clear standards of behavior for property agents. The government’s commitment to requiring letting agents to adhere to a code of practice should extend to all property agents. The proposal suggests the creation of an ‘overarching’ code, set in statute, outlining high-level principles applicable to all property agents. Underneath this, ‘regulatory’ codes specific to various aspects of property agent practice would be developed by the new regulator through working groups for each sector.
– Qualifications: In the envisioned regime, each property agency is tasked with ensuring staff are adequately trained, with oversight arrangements in place for junior staff. The recommendation stipulates that licensed agents should hold qualifications of at least level 3 in Ofqual’s Regulated Qualification Framework, while company directors and managing agents should attain a minimum of level 4 in most cases. The new regulator is expected to establish a system for quality control of qualifications.
– Leasehold and Freehold Charges: The proposal advocates granting the new regulator a statutory duty to ensure transparency of leaseholder and freeholder charges. Collaborating with the sector, including property agents, developers, and consumers, the regulator would develop regulatory codes to underpin transparency. Additionally, the recommendation proposes the new regulator taking over the power to block a landlord’s chosen managing agent when leaseholders have reasonably exercised a veto. Providing information on managing agent performance is also recommended to enable informed choices by landlord freeholders and, where applicable, leaseholders.
– Assurance and Enforcement: The proposal outlines a range of enforcement actions available to the new regulator based on the seriousness and frequency of infringements. These actions span from agreeing on remedial actions and issuing warnings to the revocation of licenses and prosecution for unlicensed practice. Effective information sharing and collaboration between the new regulator, Trading Standards, and redress schemes are highlighted as essential. Flexible working arrangements and clear guidance on roles are recommended to ensure efficient cooperation and avoid duplication of enforcement efforts.
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