Final Report on New Regulatory Proposal for Letting Agents Released

The final report on the proposal of a new regulatory framework for letting and managing agents in England has been released.

Based on the Regulation of Property Agents Working Group (RoPA)’s recommendations, the final report has been compiled by the Ministry for Housing, Communities and Local Government (MHCLG).

The aim is to raise the professional standards in the industry, with the introduction of a regulatory framework recommending the following is introduced:

• A new system of regulation;
• A new licensing regime;
• A mandatory code of practice for all property agents;
• Mandatory qualifications;
• Transparency and use of leasehold and freehold charges;
• A new regulator;
• Assurance and enforcement under the new system.

Neil Cobbold, Chief Operating Officer of PayProp, comments: “The industry will be eager to know how a new regulator will work alongside existing trade bodies and redress schemes. Moreover, the new system will need to be clear so agents and agencies know their responsibilities and consumers can understand their rights and routes to redress.

“The introduction of mandatory qualifications and licences required for operating could be successful in identifying those agencies which aren’t professionally committed to the industry and prohibit them from operating. Qualifications for all agents, no matter their experience, could also help towards achieving the ‘level playing field’ the government has been striving to create.

“However, it is important that the qualifications agents are required to have are spelt out as soon as possible so that agencies can plan for the training time and costs to reduce the impact on their business.

“Meanwhile, a Code of Practice will help to establish minimum standards for agencies and work as a benchmark for consumers using their services.

“That being said, the additional cost of funding the new regulator through an ‘industry levy’ on agents and agencies is not specified, so there could be concerns this cost could drive up landlord fees. In turn, this could drive more landlords towards the short-lets sector, which will not be regulated, or to self-management, which will not initially be covered by the new regulator.

“As we move forward with these proposals, agents’ key considerations will revolve around associated costs, time taken for implementation and how existing workforces and new recruits will be affected in the future.

“This historic shake-up can be positive for agencies, adding an additional layer of professionalism and contributing towards improving the public perception of the industry.

“The next crucial step for agents will be to start preparing for change immediately, as the report indicates that the regulator could be in place in two years. The government will need to implement the new system clearly and efficiently, with capacity for effective enforcement.”

Mark Hayward, Chief Executive of NAEA Propertymark and David Cox, Chief Executive of ARLA Propertymark have also commented on the final report: “This is a significant moment for those in the property industry and a huge leap forward in stamping out bad practice. We have long called for Government intervention to ensure everyone in the industry is licensed, adheres to a strict code of practice and holds at least a Level 3 qualification (A-level). 

“Following the extensive considerations by the working group, it is now for Government to create the structures for a properly regulated industry, whose professional knowledge and skills are trusted and respected by all.

“These are substantial changes, which will require agents to start making preparations now to ensure that they are well placed for when these proposed qualification requirements are introduced. 

“While we anticipate that the need for property qualifications will be phased in, we advise agents to get ahead of the competition and to stand out by adopting the new requirements early. Propertymark can support you and your organisation both with getting qualified and preparing for regulation.”