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The government has been criticized by the House of Lords group for failing to discuss rental regulation, despite launching a call for evidence on the matter in October 2017.
Baroness Taylor, chair of the House of Lords industry and regulation committee, wrote a terse letter to Housing Secretary Lee Rowley, criticizing him for not responding to the committee’s conclusions on the regulator.
The government established a House of Lords working group on the regulation of estate agents, led by Lord Best, which published its recommendations in July 2019.
At the time, the group proposed the creation of a new regulatory authority, a license for real estate agents, as well as mandatory business codes and qualifications as conditions for licence.
But since then, there has been little action.
A letter from Rowley to Baroness Taylor on 10 May 2024 states that the Government believes that neither the Leasehold and Freehold Reform Bill nor the Tenants (Reform) Bill are appropriate places to establish a new regulatory body. It has been stated that they do not think that is the case. Supervisor of real estate agents.
Mr Rowley added: “I would be happy to discuss these bills with you or arrange to discuss them with my colleagues as soon as they are passed by Parliament.”
Baroness Taylor responded to Rowley with scathing words on May 21, 2024.
She writes: “We are disappointed in the brevity of your response to our letter and your position that the Department will only discuss these issues after the two bills mentioned above have been passed by Parliament.
“When we wrote to the Ministry on March 22nd, we requested and expected a response to all conclusions and recommendations. None of your letters have been answered…
“Furthermore, given the brevity of your letter, it was all the more frustrating that you received it two weeks after the deadline we set (April 26, 2024).
“Taken together, I do not believe this is a satisfactory approach to parliamentary scrutiny of government policy.”
Baroness Taylor wrote to Housing Secretary Michael Gove in March 2024 asking whether the recommendations to the regulator were still being considered.
She writes: “It is unclear to the committee why the government established a working group but failed to respond to or act on its report for more than four years.
“This delay will undoubtedly have a real impact on tenants, leaseholders and others, who continue to be exposed to fraud from sectors that are regulated in an inconsistent and limited way.
“In its response to this letter, the government should explain the reasons for the delay in responding to the working group.
“Government should legislate to establish regulation of real estate agents along the lines set out in the working group’s report, including the creation of a new regulatory authority to improve standards in this sector.Government In their response to this letter, they should clarify whether they plan to establish a regulatory authority and on what timetable.
“At the very least, the government should publish a full response to the final report of the Working Group on the Regulation of Estate Agents. If the government does not agree with the report’s conclusions it should publicly say so and take a position rather than leaving the industry in limbo.”
“This published response will clearly explain what steps the government will take to improve standards in the property agency sector, or why it believes such steps are not necessary.”
In her letter to Gove, Baroness Taylor summarized many of the arguments made by the working group and reiterated that the new regulator will play a key role in raising standards.
Local Trading Standards teams now play a key role in tackling misconduct by agents. However, those resources are said to vary geographically and serve a reactive rather than a hands-on role.
Professional organizations have some value, but they have conflicts of interest, and firing a representative for medical malpractice would effectively mean losing paid membership, the task force said. Therefore, regulators should conditionally involve only these groups and ensure transparency of conflicts of interest.
For more detailed recommendations, agents will need to obtain mandatory qualifications when dealing with vulnerable consumers, while the new regulator will work closely with existing redress systems and local enforcement authorities. It is necessary to avoid duplication of work.
The working group expressed confusion that there are two relief schemes for real estate agents. The two companies are competing to attract intermediaries, which could undermine their focus on end consumers, he said. Instead, the working group said the government should approve a single ombudsman or redress scheme for intermediaries.
The group suggested that the service eventually include agents, as the government is also considering setting up an ombudsman to deal with disputes between landlords and tenants.
The group says this “doesn’t have to be a large bureaucratic regulatory body” and instead focuses on “high-risk, high-volume issues” so that the compensation system has less security for lower-level issues. He said he would enable it to function as a network.
After raising some initial capital, the new regulator could fund itself by charging modest fees to agents, with a fee structure that would not discourage new entrants into the sector.
Baroness Taylor added: “If designed right, the new regulator could make a big difference by raising standards in the sector and cracking down aggressively on agents engaging in bad behaviour.”
“It is noteworthy that there is near consensus among consumers, industry and established bodies on the need for legal regulation of real estate agents and the establishment of a new regulatory authority to manage this regulatory framework.
“However, we do not expect the introduction of regulators to be a silver bullet or resolve widespread dissatisfaction with the housing market caused by broader structural factors.”