There has been a lot of discussion about the regulation of lettings agents. Most agent’s bodies are keen on the idea (of course with themselves as an approved licensing body!), most landlord and tenants like it, and so do the various pressure groups and representative bodies. In the regional assemblies, bes with devolved powers have either regulated landlords (which immediately provides a degree of agent regulation too) or are moving to regulate agents specifically. There is just one group which stands fully against it. It is however the most crucial group, the Government.
The Government’s position is that it is not keen on further regulation for business. This is partly an ideological position, of course, founded on the Conservative party’s historical distaste for regulating business. However, there is also the, perfectly fair, point made by the government that there is already more than enough regulation in place to deal with rogue letting agency practice. When one considers the powers created by the Unfair Terms in Consumer Contract Regulations and the Consumer Protection From Unfair Trading Regulations this would seem to be true. However, these regulations are only really effective if they are enforced in a sensible and practical manner. This is not always the case. The main enforcing bodies are local authority trading standards officers. In practice, they are not generally trained for this purpose and have a weak understanding of the underlying law and the legislation they seek to enforce. They are also poorly resourced and so tend to focus their efforts on easier cases. Finally, they are only able to take action if they are aware of a problem. This requires consumers to complain. In practice, this means that the very worst agent, dealing with the most vulnerable sectors of society continue to get away with poor behaviour because there is nobody who is prepared to engage with the local authority to complain about them.
The Government now appears to be proposing to make all lettings agents join an Ombudsman scheme, in the same way as estate agents are obliged to do so. This is to be done by a last minute change in the Enterprise and Regulatory Reform Bill which is in its final stages in Parliament. This may help the situation. From experience as a solicitor, it is clear that one of the key problems consumers face in complaining about professional services is a lack of certainty about who to complain to. However, an Ombudsman scheme is only truly effective if there are clear penalties for not joining which are actively enforced, and if the Ombudsman enjoys genuine respect and cooperation from the industry. It is not clear how the government intends to do this. Unlike solicitors and the Legal Ombudsman there is no central regulating authority with a list of all lettings agents who can ensure they join a scheme. The system will only really work if consumers report those who have not joined. This will require investment in consumer information, something successive governments have utterly failed to do in the property sector. There is also some doubt as to what level of genuine respect the various Ombudsman services have. For a start there is more than one so there is a level of competition between them and, to date, they have been fairly optional in the lettings sector so agents have been free to ignore them. In addition, they have not always been sensible in their statements and decisions and have been too quick to interfere or make pronouncements on their perception of the law which have not always been accurate.
If the government is serious about agent regulation it must do three things:
- Find some way of creating a list of lettings agents or identifying those who flout regulation;
- Actively enforce the regulatory process and make sure consumers are very aware of it;
- Make sure the regulatory body is credible and serious and produces quality decisions.
A last minute change to a Bill which is largely complete is not the best way to achieve this, especially as the Government was not keen to do it and appears to have had its hand forced by the Lords. However, the Government could rebound from this less than promising beginning if it follows the steps above.