Regulation of Property Agents

The Ministry of Housing, Communities & Local Government (MHCLG) has published a report by the property agents working group containing recommendations for government on a new regulatory framework.

Membership of the working group includes RICS, ARLA Propertymark, National Association of Estate Agents (NAEA) and NLA amongst others. The government has proposed that property agents are regulated by an independent regulator with mandatory qualifications and a code of practice. The working group has been tasked with advising on how to make this regulation a reality.

Regulation will extend to all those carrying out property agency work in England, including auctioneers, rent to rent firms, international and online agents. But it will not extend to property portals, such as Rightmove, because they do not perform agent functions. To ensure all those that should be licensed will be, it is recommended that the government should create a list of ‘reserved activities’ which can only be performed by a licensed property agent at a regulated firm.

Agents and firms will be required to hold and display a licence to practise from the new regulator. Any licence will require an agent to fulfil its legal obligations and pass a fit and proper person test. The working group also recommends that the new regulator should be able to vary any licensing conditions as it sees fit and maintain an accessible record of property agents.

Codes of practice for letting agents will set out clear standards of behaviour and should be mandatory. Agents will be required to act with honesty and integrity and ensure that all staff is appropriately qualified and maintain an effective complaints procedure.

The new regulator should be given statutory powers to ensure transparency of leaseholder and freeholder charges. The new regulator should also take over from the First-tier Tribunal the power to block a landlord’s chosen managing agent where the leaseholders have reasonably exercised a veto. Performance of managing agents should be made available to allow landlord freeholders and leaseholders to make an informed choice of agent.

The government should consider establishing a new public body to undertake the role of regulator who will be accountable to the Secretary of State. The regulator will be funded by the firms and individuals it regulates with initial funding provided by the state. The regulator could take over responsibility for the approval of property agent redress and client money protection schemes. Finally, enforcement should be by way of a range of options according to the seriousness of the infringement and how regularly it has occurred.

The regulation of agents is likely to happen however, the process is in its very early stages and with the government busy elsewhere regulation is unlikely to take place before April 2020.

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