A moving tide of regulation making its way towards estate agents

It may well seem that the government is pre-occupied with one issue, and one issue alone.

While preparations for Brexit take up a considerable amount of time, there are a number of ongoing work streams and consultations that will have a significant impact on housing practitioners, regardless of what the future might hold.

Estate agents, in particular, are a stakeholder group that is potentially in the regulatory spotlight more than most and there is a moving tide of regulation making its way towards agents, focusing on the work they carry out and their responsibilities in the future.

Agents who might think they will remain spared by the various groups working in this area, are likely to be sorely disappointed, because this is a movement that is not just being run by one department or Trading Standards or various government committees, but by all of the above.

Let’s look at where the change is going to come from and what this will mean for agents. Firstly, we have the government’s own Regulation of Property Agents Working Group which is due to announce its final report this summer. This has been charged with delivering in a number of areas:

• Providing advice to the government on a model for an independent property agent regulator, how it will operate and how it will enforce compliance.

• Setting up a single, mandatory and legally-enforceable Code of Practice for agents.

• Introducing a system of minimum entry requirements and continuing professional development.

• Exploring fees, charges and the ability to choose a managing agent for leaseholders and freeholders.

While it’s anticipated that agents will be given a reasonable amount of time to adapt to the new requirements, it’s fair to say that once the report is delivered, the government will be looking to solidify what it wants to see before the end of the year.

Agents also have to deal with a not unsubstantial boost to those charged with enforcing the rules, legislation and requirements which apply to them.

Just this year, the National Trading Standards (NTS) Estate Agent and Letting Agent Team had its funding increased and we have recently learnt this has resulted in more staff, with Powys County Council remaining the lead authority for policing estate agents, while Bristol City Council will now be the lead enforcement body for lettings, although the bulk of enforcement work will be done by local authorities across England.

In essence, the bulked-up NTS teams will oversee estate/lettings agent legislation, issue prohibition and formal warnings; approve and oversee the consumer redress schemes, Ombudsman and Alternative Dispute Resolution entities, and issue guidance and advice to the public, businesses and enforcement authorities.

On top of this, we have the specific work being undertaken as part of the government’s focus on leasehold although agents should be aware of the significant read-across they can expect from this into freehold, etc.

For example, the HCLG Select Committee recommendations for leasehold information to be available at the point of marketing might seem like it’s just directed at leasehold and lease administrators, but actually it’s going to be relevant much wider than this, with a real appetite to ensure that all homemovers/purchasers are truly aware of what they’re making an offer on.

In that sense, gone are the days where agents either do not collect the material disclosures, or if they do, the potential purchaser never actually gets to see it.

Anyone marketing property has been liable for over 10 years to produce this information but only now do NTS have sufficient resource to make sure that those they regulate are actually obtaining all the necessary information and (rather importantly) that they are sharing it with potential buyers so they have this upfront and can use it to inform the decisions they make.

We are already seeing this in action. There is a landmark case being brought by Cardiff NTS off the back of 30 complaints of failure to comply with consumer protection legislation and the Competition and Markets Authority are looking into the mis-selling of leasehold - it won’t just be developers in the frame but estate agents too.

For some agents, this in particular – but also all the regulation and legislation that is inevitably coming over the horizon – might seem like a scary prospect but the aims of such change are true.

While it’s true to say that for the policy makers they are to ultimately ensure that we have a transparent system where all information is known at the start of the process, the benefit to the estate agent and all involved is that having the information available up-front will speed up transactions and prevent fall throughs.

Having been an estate agent I know just how attractive that is in a market where cash-flow is tricky to say the least.

And there is help at hand. The Home Buying and Selling Group are already working on a form which, triggered by the estate agent at listing, will enable sellers to record all of the material disclosures as well as the conveyancing information whilst reducing the current duplication in the process.

Amongst many other stakeholders in the industry, the NAEA Propertymark Transaction Transformation Group and NTS are both involved in the development of the form so I hope there will be some comfort for estate agents and developers that they are providing sufficient information to meet their regulatory requirements whilst creating a positive home moving experience for all and shaving weeks off the conveyancing process.

That surely has to be worth the pain?

*Beth Rudolf is Director of Delivery at the Conveyancing Association (CA)