Lords' vote on regulating letting agents just scrapes through

An amendment to regulate letting agents by bringing them under the scope of the Estate Agents Act only just scraped through in the House of Lords.

The majority was only five, with 211 supporting Baroness Hayter’s proposal and 206 against it.

Almost with exception, the peers voted along party lines – raising a large question mark as to what will happen to the amendment when the measure goes to the Commons.

This was the second time that Hayter, a Labour peer who chaired the now defunct Property Standards Board, had moved the amendment to the Enterprise and Regulatory Reform Bill.

If – and it is a big if – it is approved by the Commons, it would mean that letting agents would have to belong to an ombudsman scheme and could be banned by the Office of Fair Trading – which currently does not recognise letting agents as estate agents.

The move would also prevent estate agents who had been banned from opening up the following day as letting agents.

On the first occasion she withdrew her amendment as a matter of procedure after the Government made its opposition clear.

Last week, the Government continued to maintain its opposition.

Speaking for the Government, Viscount Younger of Leckie, parliamentary under-secretary at the Department for Business, Innovation and Skills (BIS), said that expanding the supply of rented homes was “at the heart of the Government’s strategy. We want a bigger and better private rented sector.”

But boosting supply, he said, meant avoiding excessive regulation.

“Excessive regulation, however well intentioned, can result in precisely the outcomes we want to avoid,” he said. “That is why we did not proceed with the proposals of the previous Government, such as a national register of landlords and the full statutory regulation of letting agents.”

He went on: “We have heard a number of people express the view that the lettings market is totally unregulated. That is not in fact the case.” He drew attention to legislation such as the Unfair Trading Regulations, and Unfair Terms in Consumer Contracts Regulations.

He added: “We know that trading standards bodies use these powers to prosecute lettings agents. Some very substantial fines, and indeed prison sentences, have been handed down to agents who engage in serious misdemeanours, such as misrepresenting their membership of professional bodies, or indeed misappropriating clients’ money.”

He said that he strongly supported “making better use of existing regulations before we create new ones”.

Hayter, in wrapping up the debate, pointed out that current housing minister Mark Prisk wanted regulation of letting agents back in 2007.

The wafer-thin majority in the Lords did not stop the lobbyists from greeting the amendment almost as though it was a done deal.

Ian Potter, managing director of ARLA, said: “We all look forward to working with the Government on the Bill as it moves back to the Commons for final approval.”

The British Property Federation said it welcomed the amendment “that will introduce statutory regulation of letting agents”.

Property Ombudsman Christopher Hamer said: “This will mean greater protection for a number of consumers.”

Peter Bolton King of the RICS sounded a note of caution, saying that the decision was “one step nearer to this vital change becoming law”.

When the Bill does get back to the Commons, much will depend on the usual behind-the-scenes horse trading. While the Conservatives are against regulating letting agents, their coalition partners, the Lib Dems, support the idea.