Housing minister Mark Prisk – who once proposed the full regulation of letting agents – says that a proposal to bring the industry into the scope of the Estate Agents Act would have created problems and not solved them.
In a blog on the CLG website, he explains why a last-minute government amendment overturned a proposal by Labour’s Baroness Hayter.
The government amendment paves the way for all letting agents to have to belong to an ombudsman scheme. It is understood that a consultation may have to focus on the definition of an ‘agent’.
Prisk also says that letting agents are already subject to laws, which protect tenants, and he refers to a case which we reported last year. See the link at the end.
This is his blog in full:
“The private rented sector has been growing in size and popularity for many years – a testament to its vital importance for the housing market.
We’re now building on this success with a major Budget package to expand the supply of new homes. But we’re also determined to ensure that people get a fair deal throughout their tenancy, and particularly from their lettings agent.
So this Government is taking steps to protect landlords and tenants from unscrupulous letting agents.
For too long a small minority of dodgy letting agents have delivered an unacceptably poor service to tenants and landlords, damaging the reputation of an entire industry.
There are already consumer protection laws for tenants, but there’s also growing evidence that concerns and complaints about letting agents are not being properly addressed.
This includes a recent report from the OFT about the performance of letting agents, and a survey by Which? that found one in five tenants and one in six landlords were dissatisfied with the service they received.
New redress scheme for tenants and landlords
That’s why on Tuesday we revealed plans to require anyone wanting to operate as a letting agent to belong to an approved redress scheme.
Belonging to a redress scheme, a central recommendation from the OFT, will give a clear route for landlords and tenants to pursue complaints if they don’t get the service they deserve, and weed out the cowboys and rogue operators that give letting agents a bad name.
Redress, not red tape
Our plans overturned an amendment to the Enterprise and Regulatory Reform Bill which would have made letting and managing agents subject to the Estate Agents Act 1979.
We believe that this proposal for full regulation, by Baroness Hayter, was unclear and would have created an imprecise and clumsy tool that created problems rather than solving them.
Tenants and landlords would not have a straightforward route to address poor service, and it would impose a significant regulatory burden that would be passed across to tenants and leaseholders, and reduce innovation and competition within the industry.
With around 60% of all letting agents already belonging to a redress scheme, our proposals should be a simple requirement for the industry to meet.
Busting myths about the private rented sector
So we’re bringing in new rules, but I also want tenants to be aware of existing legal protections they can use to get the service they deserve.
A common myth is that there are currently no laws protecting tenants from unscrupulous letting agents.
There are, and they’re working.
Take for example the recent case in Oxford where a letting agent faced a bill of over £300,000 in fines and legal costs after failing to return tenants’ deposits, letting out properties without consent and not passing on rent to landlords.
Our new plans will bolster these protections, ensuring tenants receive a good service but without strangling the private rented sector in red tape.”
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