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The regulation of letting and managing agents (England)

Published Thursday, February 16, 2017

There is no overarching statutory regulation of private sector letting or managing agents in England. This Commons Library briefing paper describes the current regulatory regime in England and considers early reactions to the Government’s intention to introduce a ban on fees for tenants. Comparisons are drawn with policy in the devolved nations.

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A sector growing in importance

The private rented sector is now the second largest tenure in England behind owner occupation. The growth of the sector has prompted an increased focus on management standards and, in particular, on the activities of letting and managing agents.

Housing policy is devolved and divergent approaches to private rented housing are emerging in Scotland, Wales, and Northern Ireland. This paper focuses on policy in England, but does draw comparisons with developments in the devolved nations.

No overarching statutory regulation

There is no overarching statutory regulation of private sector letting or managing agents in England, nor is there any legal requirement for them to belong to a trade association, although many letting and managing agents do submit to voluntary regulation.

To date, the Government has not committed to the introduction of regulation for letting/managing agents in England and has pointed instead to the existing range of available powers under consumer protection legislation. However, since 1 October 2014, agents have been required to be a member of an approved redress scheme, and since 27 May 2015 they have had to comply with requirements relating to the publication of fee tariffs. 

When measures in the Housing and Planning Act 2016 come into force (expected to be October 2017), it will be possible for local authorities to seek banning orders against landlords and agents who commit certain offences.

Support for more regulation

There is support within the industry from professional bodies such as the Association of Residential Letting Agents (ARLA), the National Landlords Association (NLA) and Residential Landlords Association (RLA) for improved regulation of letting/managing agents in order to drive up standards.

Banning letting agents' fees for tenants

However, there is resistance amongst professional bodies in the sector to the Government’s announcement in the Autumn Statement 2016 of an intention to legislate to ban letting agent fees for tenants. The Government has said that it will carry out a consultation exercise in the Spring before introducing legislation.

Scotland introduced a ban on most agency fees for tenants with effect from 20 November 2012. Shelter and Citizens Advice have long lobbied for a similar ban in England. Those supporting the move cite unreasonable and inconsistent fee levels and charges for poor services by agents, while ARLA, the NLA and the RLA argue that, despite the ban, costs will still have to be met and that there is a risk of this resulting in tenants facing increased rents. Consideration of evidence of the impact of the Scottish ban by the Communities and Local Government Select Committee over 2014-15 led to the conclusion that evidence of its impact was “inconclusive.” The Committee recommended that the Department for Communities and Local Government should conduct additional research in the area.

Regulation of agents in the devolved nations

In addition to banning fees for tenants, Scotland is introducing a registration scheme for letting and managing agents. Wales now requires agents to be licenced and in January 2017 the Department for Communities in Northern Ireland announced an intention to “Introduce a regulatory framework for all letting agents including bringing forward legislation to ban letting agent fees.” This will leave England as the only area in the UK without comprehensive regulation of letting and managing agents.

Commons Briefing papers SN06000

Author: Wendy Wilson

Topics: Housing, Private rented housing

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