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House of Lords group frustrated by government on lettings regulation

Baroness Taylor of Bolton

The government has been blasted by a House of Lords group for failing to discuss lettings regulation, despite launching a call for evidence on the subject back in October 2017.

Baroness Taylor, chair of the House of Lords Industry and Regulators committee, has sent a terse letter to housing minister Lee Rowley, accusing him of failing to respond to its conclusions on regulating agents.

The government established a Lords working group on the regulation of property agents led by Lord Best, which published its recommendations in July 2019.

At the time, the group suggested creating a new regulator, a licence for property agents, as well as mandatory codes of practice and qualifications as conditions for the licence.

However there’s been little action since.

A letter to Baroness Taylor from Rowley, sent on 10 May 2024, stated that the government doesn’t consider the Leasehold and Freehold Reform Bill, nor the Renters (Reform) Bill, the right place to set up a new regulatory body to act as a watchdog on property agents.

Rowley added: “I would be happy to discuss this with you, or to arrange for a colleague to do so, once these Bills have concluded their parliamentary passage.”

Lee Rowley

Baroness Taylor responded to Rowley in scathing terms on 21 May 2024.

She wrote: “We were disappointed by the brevity of your response to our letter, and by your position that the department will only discuss these matters once the two Bills above have concluded their parliamentary passage.

“When we wrote to the department on 22 March, we requested, and expected, a response to all of our conclusions and recommendations; your letter does not respond to any of them…

“Moreover, given the brevity of your letter, it was all the more frustrating to receive it two weeks after the deadline we had set (26 April 2024).

“Taken together, we do not believe this is a satisfactory approach to parliamentary scrutiny of government policy.”

Baroness Taylor had written to housing secretary Michael Gove in March 2024, in which she asked whether the recommendations for regulating agents were still being considered.

She wrote: “It is unclear to the committee why, having established the working group, the government has not responded to or acted upon its report over four years later.

“This delay will undoubtedly have had real consequences for tenants, leaseholders and others, who continue to be exposed to malpractice from a sector that is regulated in an inconsistent and limited way.

“In their response to this letter, the government should explain the reasons for its delay in responding to the working group.

“The government should legislate to establish regulation of property agents along the lines set out in the working group’s report, including through the establishment of a new regulator to improve standards in the sector. In its response to this letter, the government should state whether or not it plans to establish a regulator, and on what timescale.

“At the very least, the government should publish a full response to the final report of the working group on the regulation of property agents. If the government disagrees with the findings of the report, then it should say so publicly and set out its position, rather than leaving the sector in limbo.

“This published response should set out clearly what action the government will take to improve standards in the property agency sector or explain why it feels such steps are not necessary.”

In the letter to Gove, Baroness Taylor summarised many of the arguments stated by the working group, reiterating that a new regulator would play a critical role in driving up standards.

Michael Gove

Local Trading Standards teams are currently important in dealing with illegal behaviour from agents. However, they are said to hold a reactive rather than practice role, while their resources differ geographically.

Professional bodies have some value but have a conflict of interest, the working group said, as if they strike off an agent for malpractice they are effectively losing a paying member. Therefore the regulator should only involve these groups subject to conditions, ensuring any conflicts of interest are made transparent.

In terms of more detailed recommendations, agents should have mandatory qualifications when dealing with vulnerable consumers, while a new regulator should work closely with existing redress schemes and local enforcement authorities to make sure work isn’t duplicated.

The working group expressed confusion why there are two redress schemes for property agents, which it said are in competition to attract agents, potentially undermining a focus on the end consumer. Instead, the group said the government should approve a single ombudsman or redress scheme for agents.

Seeing as the government is also looking to launch an ombudsman to deal with landlord-tenant disputes, the group suggested eventually including agents as part of this offering.

The group said this “does not have to be a massive bureaucratic regulator” and could instead focus on “those issues that are high risk and high volume”, allowing the redress schemes to act as the safety net for lower-level issues.

After some early funding, the new regulator could be funded by charging modest fees on agents, with a fee structure that shouldn’t detract new entrants to the sector.

Baroness Taylor added: “If designed correctly, a new regulator would make a significant difference by driving up standards in the sector and proactively enforcing against agents who engage in bad practice.

“It is notable that there is near unanimity from consumers, industry and existing bodies on the need for statutory regulation of property agents and the establishment of a new regulator to manage this regulatory framework.

“We do not, however, expect the introduction of a regulator to be a silver bullet or to resolve widespread dissatisfaction with the housing market, which is caused by broader structural factors.”