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The regulation of letting and managing agents (England)

Published Monday, March 26, 2018

There is currently no overarching statutory regulation of private sector letting or managing agents in England but the Government has said that regulation will be introduced. This briefing paper describes the current regulatory regime in England and includes comparisons 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 draws comparisons with developments in the devolved nations.

Consultation on the introduction of regulation

There is currently 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.

After a period during which the Government resisted calls for the introduction of regulation for letting/managing agents in England, instead pointing to the existing range of available powers under consumer protection legislation, the Secretary of State, Sajid Javid, announced that action would be taken to regulate letting agents during the Conservative Party’s 2017 Conference. A call for evidence, Protecting Consumers in the letting and managing agent market, was issued later in October 2017. Submissions were invited up to 29 November 2017; responses are being analysed.

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. 

The Government also intends to require all landlords to be covered by a redress scheme as well as agents. February 2018 saw the publication of consultation on Strengthening consumer redress in the housing market. Submissions are invited up to 16 April 2018. This paper is seeking views on how such a redress scheme might operate and also poses a possibility of streamlining the various redress schemes by introducing a single housing ombudsman.

Measures in the Housing and Planning Act 2016 have given additional powers to local authorities to act against ‘rogue’ landlords and agents. Since 6 April 2017 authorities have been able to impose civil penalties of up to £30,000 in certain circumstances, and there are now additional circumstances in which a Rent Repayment Order may be granted. From 6 April 2018, local authorities will be able to seek banning orders against landlords and agents who commit certain offences. The Secretary of State can also establish a database of landlords and agents subject to a banning order, Regulations setting out the information that should be recorded in the database also come into force on 6 April 2018.

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 published a consultation paper, Banning letting agent fees paid by tenants, on 7 April 2017 followed by a draft Tenants Fees Bill in November 2017 which has been subject to scrutiny by the Housing, Communities and Local Government Select Committee. The April 2017 consultation also sought views from the sector on whether there was a case for wider regulation of letting agents without creating an undue burden.

Scotland clarified its 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 (now the Minister of Housing, Communities and Local Government) should conduct additional research in the area.

A separate Library briefing paper: Banning letting agency fees in England (07955) considers this issue in more detail.

Regulation of agents in the devolved nations

In addition to banning fees for tenants, Scotland has introduced a registration scheme for letting and managing agents. Wales also 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 leaves England, currently, as the only area in the UK without comprehensive regulation of letting and managing agents.

Commons Briefing papers SN06000

Author: Wendy Wilson

Topics: Housing, Housing standards, Private rented housing

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