In his speech at the Conservative party conference the Secretary of State for Communities and Local Government, Sajjid Javid, slightly unexpectedly stated that the government intended to regulate letting agents. This was something that had been called for by a range of groups for some time but the government had stated they thought it was unnecessary so the announcement came as something of a surprise.
Today the DCLG has published a consultation entitled “Protecting consumers in the letting and managing agent market: call for evidence“. This consultation states that it is seeking evidence as to whether “a new regulatory model” is needed in the lettings sector and what form this regulation could or should take. This appears to be a slight roll-back from the Secretary’s speech in that the DCLG is not stating that they are definitely going to regulate but asking if they should do so at all. They are also leaving open the exact mode of regulation and so they may conclude that existing redress schemes, possibly with more powers, are sufficient.
The consultation in fact has a pretty detailed analysis which concludes that there is an issue to be addressed, so it seems that DCLG are fairly committed to action. The consultation continues by reviewing minimum entry standards and seeking views on whether agents should be required to belong to a professional body and whether some minimum standard for that membership should be set.
The government has three proposals for regulation:
- Requiring agents to join a professional body and setting some minimum standards for them;
- As with option 1, having a requirement to join a professional body but then creating a new oversight regulator which will oversee those professional bodies, in a similar way to the Legal Services Board having oversight over the various legal regulators; or
- Having a new regulator which agents have to join directly.
The consultation finishes by considering enforcement and empowerment options. There is clear consideration being given to making failure to join a scheme a criminal offence but there is also thought being given to more empowerment of long leaseholders to challenge the appointment of managing agents and ask the landlord to replace them.
The consultation runs until 29 November 2017. This does not mean that it will end up in legislation and any such legislation will be quite far down the road given the pressures on parliamentary time as we move toward Brexit. However, this is a definite step in the road to full agent regulation.