Letting Agent Regulation

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Letting Agent Regulation

Postby Nick » Wed Apr 17, 2013 11:18 am

There seems to be an incredible amount of wrong information about Letting Agent Regulation out there ........ which makes it the perfect subject for discussion!

The Daily Mail says:

MPs are today set to approve rules that are hoped will banish rogue lettings agents, forcing them to sign up to schemes that provide victims of unscrupulous practices with compensation.
After years of calls for regulation of the lettings industry the Government is set to bow to pressure to implement rules, via an amendment to the enterprise bill, that will compel agents to repay tenants and landlords they have cheated.
While estate agents already abide by a strict set of rules, this will mark the first time that the lettings industry has seen statutory regulation after years of self-regulation.

There are two redress schemes currently run in the UK - The Property Ombudsman (TPO) and Ombudsman Services: Property - but they are voluntary only.
Trade bodies such as the Association of Residential Letting Agents (ARLA) and the UK Association of Lettings Agents (UKALA) are covered by these redress schemes and have their own forms of insurance protecting tenants and landlords, but again membership is not compulsory for agents.
Many small agents are reluctant to hand over subscription fees to the trade bodies so will not have access to the schemes.
Most of the major lettings agents, often attached to estate agent companies, will be members of these bodies and offer these protections. However, it impossible to say with any accuracy what proportion of agents are signed up because anyone can start a lettings business without any form of registration or licence.


Now I think that they wrote their story when Lettings Agents were going to be regulated. The Government has decided that they aren't now, and instead are proposing that agents will be required to join a redress scheme. I think the Mail looked at the changes & decided to run their story anyway! However the legal profession take a much dimmer view of what is happening, seeing things from a legal perspective they see the proposals as an unworkable pigs ear - a bit like the deposit protection scheme was first time round, and the weird article 4 regulation of landlords.

Some of the aforementioned elected representatives were seeking to use the Enterprise and Regulatory Reform Bill which is currently in Parliamentary ping pong as a vehicle to do this. I would try to explain what this Bill is actually intended to do but in all honesty it is such a hodge-podge of items the list would extend well beyond your reasonable tolerance. Naturally, this sort of Bill tends to become a vehicle for every interest group in Parliament to push one of their pet projects. This is what has happened with regulation of letting agents.

In the Lords a number of amendments were pushed forward, the most enduring of which was to extend the Ombudsman schemes for estate agents created by the Consumers, Estate Agents and Redress Act 2007 to lettings. The government opposed this amendment and has had it booted out by the Commons, instead wheeling in an amendment of its own which permits the Secretary of State to make an order requiring letting agents to belong to a redress scheme.

What this order will look like is unclear. It appears that a consultation is to come. However, Jo Swinson, for the government did perhaps drop a hint when she indicated that the schemes would “ensure that tenants have access to redress”. There was no specific mention of landlords. How such a scheme can impose a new legal duty on letting agents to provide tenants with redress when there is no legal relationship between tenant and agent remains to be seen. The consultation should be interesting.


The professional view from Nearly Legal who struggles to retain patience with what is clearly an incompetent approach to housing from the government.
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