For instance the working party’s chairman, Lord Richard Best, has told Estate Agent Today that one of the key proposals - a new regulator - is likely to be achieved within two years.
The proposals are contained in a 54 page document. Key recommendations are:
Scope of new regulation: “We recommend that all those carrying out property agency work be regulated (including auctioneers, rent-to-rent firms, property guardian providers, international property agents, and online agents)” but this regulation will not extend to property portals like Rightmove and Zoopla nor to the Airbnb-style short-let sector.
“However, we recommend that the legislation required to regulate property agents should allow for future extension to the scope of regulation (e.g. to include at a future point regulation of landlords, freeholders and developers – as well as retirement housing managers and Right to Manage companies).”
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The new regulator: “We do not consider that an existing body could take on the role of the new regulator. Therefore, Government should establish a new public body to undertake this role. The new regulator should be established and run with regard to general principles of good governance, including: independence, openness and transparency, accountability, integrity, clarity of purpose and effectiveness. The new regulator, through its board, should be accountable to the Secretary of State for Housing, Communities and Local Government. It should publish an annual report on its progress in raising standards of property agents, using agreed key performance indicators – including customer satisfaction …
“We recommend that the new regulator take over responsibility for the approval of property agent redress and client money protection schemes. The new regulator should have the power to appoint a single ombudsman for property agents, rather than competing redress schemes, if they believe this to be the best way of improving standards.”
“The new regulator should be able to consider complaints from all sources. Where solicitors, lawyers or other professionals have evidence of possible illegal agent behaviour, they should be obliged to present it to the new regulator.”
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Licensing: “To confirm appropriate qualifications and credentials, property agencies and qualifying agents should be required to hold and display a licence to practise from the new regulator. Before granting a licence, the new regulator should check that an agent has fulfilled its legal obligations (such as belonging to a redress scheme and submitting a copy of their annual audited accounts to the new regulator) – and that they have passed a fit-and-proper person test. We recommend that the new regulator should be able to vary licensing conditions as it sees fit and that it maintains accessible records of licensed property agents.”
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Codes of Practice: “Codes of practice set out clear standards of behaviour. The Government has already committed to requiring that letting agents adhere to a code of practice, and we recommend that all property agents be required to do so. There should be a single, high- level set of principles applicable to all property agents which is set in statute: the ‘overarching’ code. Then, underneath, ‘regulatory’ codes specific to various aspects of property agent practice, binding only on those providing these types of services.
“Key principles for the ‘overarching’ code should include that agents must act with honesty and integrity; ensure all staff are appropriately qualified; declare conflicts of interest; and have an effective complaints procedure in place. To develop and maintain the ‘regulatory’ codes, the new regulator should establish a working group for each sector of property agency to work up sector-specific detail.”
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Qualifications: “In the new regime, every property agency should be responsible for ensuring their staff are trained to the appropriate level and clear oversight arrangements are in place for junior staff. To ensure levels of qualification are appropriate yet proportionate, the working group recommend that licensed agents should be qualified to a minimum of level 3 of Ofqual’s Regulated Qualification Framework; company directors and managing agents should be qualified to a minimum of level 4 in most cases.”
The new regulator will be expected to develop a system of qualification quality control.
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Leasehold and freehold charges: “The new regulator should be given a statutory duty to ensure transparency of leaseholder and freeholder charges, and should work with the sector (property agents, developers and consumers) to draw up the detail of the regulatory codes to underpin this aim as it applies to property agents … We recommend that the new regulator takes over from the First-tier Tribunal the power to block a landlord’s chosen managing agent where the leaseholders have reasonably exercised a veto. We also recommend that the new regulator provides information on managing agent performance to allow landlord freeholders - and where relevant, leaseholders - to make an informed choice of managing agent.”
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Assurance and enforcement: “We recommend that the new regulator should have a range of options for enforcement action according to the seriousness of the infringement and how regularly it has occurred. These options should range from agreeing remedial actions and issuing warnings up to the revocation of licences and prosecutions for unlicensed practice.”
“The new regulator and other bodies (such as Trading Standards and redress schemes) will need to share information and work together effectively. There should be a system of flexible working between the new regulator and Trading Standards teams, and the new regulator should set out guidance clarifying their own and Trading Standards’ roles with regards to enforcement action to avoid duplication.”
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The entire recommendations document is tightly packed with detail and will become a major talking point for the industry. You can read it for yourself here.
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The day MP's require qualifications to do their job can't come a day too soon. They should also be band from sitting on the boards of companies as this is a conflict of interest. How about some kind of penalty for going over budget, missing deadlines and any other of the complete incompetent balls ups they make on a daily basis.
Fair enough with progressive qualifications.
But LL should also be licensed and have to undergo CPD training.
I know a lot of agents gave pushed for licensing and regulation for a long time because they believe it will result in less competition and higher fees. Yes I recognise the more laudable arguments but call me cynical if you like if I put them aside. However, as someone who went through the regulation of financial services and saw first hand the mess it made and the implosion of that industry I would say this, beware what you wish for. I note in the report there is special mention of the Financial Conduct Authority and the regime it oversees, giving the clear impression that it is the model on which property regulation will be based. Prior to regulation there were over 200000 individuals selling insurance, investments and pensions, after regulation this went down to about 40000 and has never substantially recovered. The outcome has not really increased consumer confidence or provided a better service, it has however disenfranchised a large part of the population from receiving any advice at all. I liken the FS regulation to regulating car salesmen but not regulating the cars themselves. This may not have a direct parallel with property agency but it will be the same general approach that is applied. I’m all for light touch regulation that places responsibility on the right people and requires some individuals to complete focused and relevant training. The idea that all those engaged in property agency work should be subjected to a regime similar to that imposed on financial advisors is wholly disproportionate and if followed through will result in a similar implosion in the industry. The report doesn’t cover private landlords, not its remit apparently, although there is a recommendation that similar regulation be extended to cover them, ironic when you consider over half of landlords don’t use an agent for anything and the vast majority of problems originate from this part of the sector. Having read the report in full I think the bits that apply to estate and lettings agents are derivative, lack insight and do not feel like the basis for legislation. I am not saying there won’t be regulation of the industry, just that this doesn’t feel heavy weight enough to be its precursor. We already have a highly disparate and clumsy framework to consider and replacing it with a new one size fits all body will be a mammoth task, I wonder whether legislators will have the stomach to see it through given their other priorities. I have no doubt this report will excite a lot of reaction both for and against , we shall just have to see how things unfold.
Having just read the 56 page report, it seems based on the premise that as the general public do not 'trust' estate agents and property professionals there is a need to regulate. Lord Best who oversaw the report I know has a major background in property matters - but not perhaps a working knowledge of the industry at ground level. Apart from the obvious new levels of red tape, the cost of the new regulator to be paid for ultimately by the agents and property professionals, and the cost for training that the new report calls for, which once again will hit the profitability of all agents, I am struck that the report is saying that the present bodies who regulate the property profession are not fit for purpose, not really a ringing endorsement for those hardworking people. Given the government has not resolved Brexit, after three years, I think that this issue of more regulation for the property industry may well be kicked into the long grass as other more pressing issues come to the political fore. especially after next Monday evening. As a person who helps and develops agency businesses I am all for training and professional standards and codes, but - why does the government want to add more regulation to the property sector? Should car sales people, double glazing sales people and MP's not also have extra regulation based on the same premise that this report has, that a low percentage of folk do not trust them. Many MP's when elected have zero training or competency of being an MP, and yet they make decisions from the first day they arrive at the house, decisions that have ramifications for their constituents, maybe they need to have formal qualifications and annual tests to prove they are a 'fit' person as detailed in Lord Best's report on estate agency professionals.
What an unhelpful mess this is going to be, not because regulation is a bad thing, but because it is likely to be botched and confusing and achieve little actual benefit.
Not sure regulation and rules will solve the matter , we are leaving the EU partly because of all the rules they bring out each month , cutting the Red Tape .
Nah! nothing to do with it really.
Most about stopping the free movement of people within the EU and not wanting to be part of the EU political construct.
The UK will manage its own regulations.
If politicians introduce stuff the electorate doesn't like then a GE can resolve things.
The EU is a corrupt construct.
It's accounts haven't been signed off for decades!!
As an Island nation we will govern ourselves with no interference from Johnny foreigner!!
Agree with regulation for LA
Landlords should be included too
By being qualified will bring knowledge.
I have all my Staff qualified.
We are the top sellers and listers in the area now.
Fees have remained the same but the recognition is making a difference.
A case of running before learning to walk. Licencing is a good thing IMO. But make it simple. Start really easy, take a look back and see what lessons were learnt before adding the next steps.
Licencing (and mild regulation) will add a layer of perceived professionalism from those outside looking in, but the great agents will still be greats and those causing most of the headaches for the industry will still do so with a piece of paper framed in their office
This is NOT what happened in the mortgage broking industry.
Qualifications removed a lot of the cowboys.
The same will occur with LA and EA.
Those professional operations like yours will achieve further market recognition and will attract business because you will be all qualified.
It will be generally obvious to the consumer who are the clued up EA/LA.
By being so professional already you have a headstart so for you any Regulatory requirements will be a virtual box ticking exercise as you know it all already!!
You must be aware of those in the market that are nowhere near as competent and you.
They will fall by the wayside.
Why spend all that money setting up a "new public body" when we have RICS who are already regulating us quite satisfactorily with the code of measuring practice; the Red Book; Registered Valuer scheme; the latest code for leasing business premises to name but a few.
FSA qualifications sorted out dodgy finance salesmen CeMap helped sort out same dodgy mortgage advisors. Paid a fee to learn and take exams. No fee to thieving clueless council bods needed.
This is an important step. There are cowboys out there who go under the name of the franchise but who are unqualified and unprofessional such as operators acting under the Hunters name. A number of their operators have been taken to court over their illegal behaviour such as the one in Stoke Newington in London and it gives us all a bad name.
Better regulation means that the public will have faith in the industry
Agree with regulation but I think Grandfathering should still be allowed, a person in the industry with years of experience e is better than a junior passing an exam. If you are elderly like me been in the industry all my life and not that good at exams and pressure, i could soon be out of a job and then what will i do??? We are under enough stress with Brexit and tenancy fee bans and now exams what next!!!!!
I agree with Simon Shinerock. This could lead to a significant number of professional property advisers simply quitting. I can't see an experienced and perhaps already professionally qualified individual who has been putting transactions together for long standing clients being happy about such regulation - and having to submit audited accounts?!
Surely audited accounts is all to do with HMRC.
With compulsory CMP the funds are either there or not..A printout to a client should suffice where the funds are sitting.
Grandfathering must be used.
It was used for the road transport industry.
You simply can't throw away years of experience just because they don't have the current required qualifications.
Grandfathering is the foundation of knowledge.
Those grandfather's are able to pass on their experience to the new employees who will have to start off qualified.
As a barrier to entry this is very useful.
But we can't get rid of all that experience cos they don't have a bit of paper.
If you have been in the game for say 15 years then a grandfather you can be!!!
In perhaps 10 years time those grandfathers should achieve the new qualifications.
What cannot be allowed to occur is for the many very experienced LA and EA to be prevented from working in an industry until newly qualified.
I would far rather say to bona fide 'grandfathers' that they have 10 years to obtain all the qualifications that all new entrants will require.
Will never be enacted, won't be effective against most scams anyway, why exclude portals and those behind them? The introductory phase of property purchase is just the beginning of the process, what about conveyancing and lending which is chronically slow and self serving?
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