Call for action after four year wait for government to appoint a property agents ombudsman

The Government’s call for evidence on the issue argued that a “lack of minimum standards has allowed unscrupulous agents to enter the market” as “anyone can become a property agent regardless of their background, skills or experience”.

It then clarified its commitment to extend regulation to letting agents and managing agents through a single, mandatory and legally enforceable Code of Practice to be operated by an independent regulator/ombudsperson.

Baroness Taylor of Bolton, Chair of the House of Lords Industry and Regulators Committee, says: ““The Government has been sitting on its hands for four years, by not acting on the report of the Working Group it set up. In the meantime, the impact of poor regulation is being felt by tenants and leaseholders, and the sector has been left in limbo.”

In a letter to Michael Gove MP, Secretary of State for Levelling Up, Housing and Communities, the Committee warns that the Government’s delay is impacting tenants, leaseholders and others, who continue to be exposed to malpractice.

After hearing evidence from campaigners for leaseholders and tenants, professional bodies representing property agents, The Property Ombudsman, the Leasehold Advisory Service and National Trading Standards, the committee has found that: 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; current forms of enforcement and redress are reactive and limited in scope; the Leasehold and Freehold Reform Bill does not sufficiently address the issues that leaseholders face, and needs to be supported by greater regulation.

As a result, the committee is calling for: legislation to establish a new regulator, or, at the very least, a full published response from the Government to the report of the Working Group that recommended establishing one; mandatory qualifications for property agents including dealing ethically with consumers; industry codes of practice operated by the new regulator, focused on achieving good outcomes for consumers; a Memorandum of Understanding to be agreed between the new regulator, National Trading Standards and the redress schemes to ensure cooperation and avoid duplication; the Government to legislate for statutory consumer representation in the sector to ensure their views are loud and clear; the Government to approve a single ombudsman for property agents, rather than two competing schemes as currently; the new regulator, after initial Government support, to fund its activities through fees, charges or a levy on those it regulates.

There are a number of issues that could be tackled by a property agents ombudsman include. Conor O’Shea, Policy and Public Affairs Manager at Generation Rent, told the House of Lords Industry and Regulators Committee that private sector tenants experience issues with letting agents before, during and after their tenancies due to these “power imbalances”.

This included increases in letting agents encouraging or telling prospective tenants to bid above the advertised rent, or requesting multiple months’ rent up front,; letting agents failing to respond promptly to complaints about problems and some agents instances seeking “revenge evictions” in response to them.

The committee also heard that some agents have a “vested interest in either raising the rent or changing the tenant” in order to earn commission. Following the conclusion of a tenancy, Generation Rent said that “tenants regularly complain about spurious claims” regarding the return of their deposits.

The Working Group noted that professional bodies do provide training to property agents and some require adherence to a code of practice. However, membership of these bodies is voluntary.

Andrew Bulmer, CEO of the Property Institute, which represents managing agents, emphasised that there needs to be a regulator to raise standards and ensure proper

enforcement. He added that the “competence requirements for managing big, scary buildings have changed out of all recognition”, meaning that a regulator should be setting

the standards of competence. (Get the latest news, straight to your inbox, with one of the Yorkshire Post’s newsletters)

Martin Boyd, chair of LEASE said that it is “utterly ridiculous” that agents do not need any qualifications to manage “buildings that are as complex as a jumbo jet, and more expensive than a jumbo jet”.

Baroness Taylor, Chair of the Industry and Regulators Committee said: "During our inquiry, there was near unanimous evidence from consumers, industry and existing bodies on the need for statutory regulation of property agents and the establishment of a new regulator.

"The Government has been sitting on its hands for four years, by not acting on the report of the Working Group it set up. In the meantime, the impact on poor regulation is being felt by tenants and leaseholders, and the sector has been left in limbo. I have also expressed to the Secretary of State that we would have appreciated a minister from his department providing oral evidence to the inquiry.”