Peer loses battle over legal curbs on letting agents

A peer battling to get letting agents recognised in law as estate agents has failed in her bid.

Baroness Hayter withdrew her amendment after the Government made it plain that it would not support her proposal to extend the scope of the Estate Agents Act to include letting and managing agents. Had the proposal gone through, letting agents would have had to offer consumers independent redress to deal with their complaints, and rogue agents could have been banned from trading.

The Government’s opposition is despite what the baroness, and other speakers, pointed out: that in 2007, the current housing minister Mark Prisk tabled ‘almost identical amendments’.

The proposed amendment sparked a lively debate in the House of Lords on Wednesday.

Baroness Hayter, formerly chair of the now defunct Property Standards Board, proposed the amendment to the Enterprise and Regulatory Reform Bill.

The Bill is seeking to relax the legal regime for ‘passive’ internet agents, but Hayter’s amendment wanted to toughen it up by making letting agents answerable to an ombudsman scheme and the OFT.

She told fellow peers that the lettings industry is a big one, but completely unregulated. “There is ample evidence of rogue agents in this field,” she said.

Landlords and lettings agents may have nowhere to go if they wish to complain, she said, and lettings agents cannot be banned for bad practice.

She said: “They cannot be banned for bad practice, they do not have to provide indemnity insurance, they do not need a published complaints procedure, there are no client protection rules and there are no entry requirements or qualifications.”

She said the industry itself was behind her bid to regulate letting agents and Knight Frank had written to endorse her amendment.

She said: “This is a king-sized roll call. The industry is completely signed up to the initiative.”

She went on: “There is a major mischief at the moment as an estate agent banned by the OFT can open up the very next day as a letting agent.”

Speaking in support was Baroness Hanham, who said she would “come back with an amendment of my own about managing agents”.

Also speaking in support, Baroness Howe said the loophole should have been closed years ago.

Lord Deben (formerly John Selwyn Gummer) also spoke up, saying there was only one sensible answer: “It is not sensible to have a situation in which those who sell houses have a code that is different from the code for those who rent houses. We must help the consumer in a sensible way.”

He said it was very hard to think of any responsible, respectable body opposed to the proposal. He added: “We must find a way to ensure that rogue letting agents do not get away with it any more. There is no argument that can be put up by BIS [the government department for Business Innovation and Skills] that can overcome the simple matter of the rights of the consumer.”

However, all these arguments were knocked down by BIS under-secretary Viscount Younger of Leckie.

He said: “The Government are indeed keen to promote a greater use of redress but, understandably, want to avoid increased costs which might fall on landlords and tenants which a new mandatory regime would bring.

“While the Government acknowledge that poor practice exists in some parts of the letting sector, ministers believe that new regulation would be disproportionate and would drive some businesses from the market. This would increase costs for consumers and reduce the choice and availability of accommodation on offer to tenants.”

He went on: “I can reassure noble Lords that letting and management agents are already subject to consumer protection legislation.”

He said consumers could turn to their local Trading Standards officers, and that half of all agents belong to voluntary schemes. He said the SAFEagent scheme had been endorsed by ministers.

Lord Younger was challenged on his statement that costs for landlords and tenants would rise if letting agents were to be made part of the scope of the Estate Agents Act.

Baroness Hayter said the cost would be no more than £150, and would not put any letting agent out of business. But she reluctantly withdrew her amendment.