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Regulation must be effective and affordable

Thursday 07 December 2017

ARLA Propertymark has responded to the Government’s call for evidence on the letting and managing agent market with a clear outline for regulation and training.

Letting agents are under unprecedented pressure as the Draft Tenant Fees Bill is considered and shaped by MPs and the Communities and Local Government committee. Any changes that are introduced at this point must be effective (delivered for good reason) and affordable within this context.

A new regulatory approach is undoubtedly required in order to replace the existing ‘spaghetti’ of piecemeal legislation. The need for change is clearly demonstrated by the fact that while legislation governing the sector has increased over the last few years, prosecutions have failed to rise accordingly. Furthermore, both consumers and agents will ultimately benefit from consistency if the same framework for regulation is extended across block management and sales activities.

Professional agents are doing everything in their power to comply with wide ranging legislation while rogue agents continue to brazenly flout regulations and it is essential that enforcement activity is adequately resourced, otherwise any penalties set out in law will be meaningless. Subsequent breaches then need to carry banning orders and tough financial penalties, income from which is ringfenced to pay for further enforcement activity. In this way rogue agents will be brought to justice and standards will rise. ARLA Propertymark has reiterated our call for the list of banned letting agents to be publicly available to ensure that landlords and tenants know if they are using a banned agent.

Ensuring that agents are suitably qualified and meet minimum competency standards is the only way to drive up standards of service for consumers and eliminate existing issues in the sector. Ultimately a Level 3 qualification, designed by and specifically for, the lettings industry should be the standard, however such a significant change needs to be managed carefully through a long-term strategy. This should start initially (as in Scotland) with a requirement for the most senior agent to be trained together with at least one other person in every branch of the business. The second stage would be moving to a position, over a period of time, where all agents need to be qualified in order to practise. With the raft of existing legislation governing the lettings industry, we firmly believe that one-day or one-week training courses are an insufficient foundation to equip agents with the necessary understanding of the industry or legislative environment in which they operate. Individuals should then be required to undertake regular continuing professional development.

Our response makes the following points:

  • A new regulatory approach is needed for letting agents which should also include both block management and sales agents.
  • Agents should be required to hold a specific residential lettings and property management qualifications at a minimum of Level Three in order to practice.
  • There should be a single Code of Practice for everyone working in the industry.
  • The framework for regulation should build on existing best practice through requiring membership of a professional body who are overseen by an overarching regulator.
  • Statutory enforcement should be via Trading Standards with oversight from the overarching regulator.
  • There should be a focus on protecting consumers through transparency of banned agents and publishing details of disciplinary action taken agent them.
  • A major communication campaigns is required to increase awareness of any new regulatory regime and the additional consumer protection it provides.
  • Government should align the timetable for regulation of agents with the proposals to implement mandatory Client Money Protection (CMP) and the tenant fees ban in order that agents have time to prepare for and deal with change once, rather than prolonged and staggered change.  

Ultimately overarching statutory regulation of the whole sector is the only way for legislation to achieve coherence but enforcement is fundamental to success and in the current context it makes strong political and business sense for it to be built on the good practice of thousands of agents who already choose, voluntarily, to belong to a professional body such as ARLA Propertymark.

Read our full response