News: Parliament to debate legal recognition of letting agents

Mon, 14 Jan 13

An amendment has been proposed that would legally classify letting agents as estate agents. It is due to be discussed today in the House of Lords.

The move has been made by Baroness Hayter of Kentish Town, a former chair of the Labour party and who, as Dianne Hayter, chaired the now defunct Property Standards Board.

Today, she attempts to fulfill a vow to protect customers of all agents.

The PSB was a cross-industry body set up to raise standards, by launching a code of conduct.

Notably, it fought hard against the Office of Fair Trading’s report into home buying and selling which recommended that new ‘free’ entrants should be encouraged into the industry.

At the time, the Property Standards Board accused the OFT of putting such ‘free’ competition above the needs of consumers, and said the public needed all the protection they could get.

The Property Standards Board, launched in 2008, voted to disband itself in 2010, saying that without the force of law behind it, it was impossible to give its Consumer Charter teeth. By that time, several things had happened: the Labour administration had said it would regulate the lettings industry, but then lost the election, and the Coalition went on to make it plain it would not regulate.

In its outgoing statement, the Property Standards Board said: “Baroness Hayter, who is also chair of the Legal Services Board Consumer Panel, will continue to champion consumer rights in the House of Lords, and – along with the professional bodies which established the Board – press for the effective regulation of residential agency, to protect buyers, sellers, landlords and tenants from detriment arising from the actions of the unscrupulous minority in the sector.”

In contrast to the doomed efforts of the Property Standards Board, the OFT’s recommendation to free up the agency industry has flourished.

In the guise of the Red Tape Challenge – formerly led by current housing minister Mark Prisk – the OFT’s recommendation has resulted in the proposal in the Enterprise and Regulatory Reform Bill that the Estate Agents Act 1979 be relaxed, so that new business models, such as ‘passive’ online agents, can operate beyond the scope of the legislation.

But Hayter’s proposal would tighten up the Act in at least one important way, and will be greeted very positively by the many who have lobbied over the years for letting and managing agents to be treated, in law, as estate agents.

The proposal would mean that letting and managing agents would have to belong to an ombudsman scheme and would be controlled – and if necessary, banned – by the OFT itself.

If accepted, the amendment would mean that the OFT can no longer ban dodgy letting agents from estate agency work but allow them to continue to work in lettings.

The baroness’s amendments would affect both the Estate Agents Act 1979, to include lettings and management; and also the Consumers, Estate Agents and Redress Act 2007, where it would substitute the words ‘estate agents’ with ‘relevant estate agency work’.

It continues: “For the purposes of this section, ‘relevant estate agency work’ includes estate agency work and also letting and management agency work.”

The CEARA amendment could also take in ‘passive’ letting agents, as it specifically includes as a definition someone who ‘effects’ an introduction.

See also: Letting agents

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