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Baroness Hayter’s Proposal to classify letting agents as estate agents rejected

February 22, 2013 | Company News  

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Earlier this week, Baroness Hayter of Kentish Town, a former chair of the Labour party and who, as Diane Hayter, chaired the now defunct Property Standards Board, proposed an amendment to the Enterprise and Regulatory Reform Bill that would legally classify letting agents as estate agents. She has now withdrawn the amendment following its discussion in the House of Lords, where it was made clear that it would not be supported by the Government.

However, this may not be the end of it. The proposal could be tabled again at a later date. Were it to be accepted, letting agents would have to offer consumers independent redress to deal with their complaints, and would mean that letting and managing agents would have to belong to an ombudsman scheme and would be controlled, and banned if found guilty of bad practice, by the Office of Fair Trading. It would also mean that the OFT could no longer ban rogue letting agents from estate agency work but allow them to continue to work in lettings.

The debate was lively, but the Government’s opposition was clear when the amendment was discussed. Baroness Hayter and other speakers were quick to point out that the Government’s opposition to the proposal was something of a u-turn, given that current housing minister Mark Prisk had himself tabled ‘almost identical amendments’ in 2007.

Baroness Hayter told fellow peers that the lettings industry, while very big, is completely unregulated. She said, “There is ample evidence of rogue agents in this field.” She pointed out that letting agents and landlords may have nowhere to go if they have a complaint, and that letting agents cannot be banned for bad practice.

“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 went on to say that she had the backing of the industry, with Knight Frank having 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.”

Supporting voices came from Baroness Howe, who remarked that the aforementioned loophole should have been closed years ago, and from Baroness Hanham, who said she would be putting forward an amendment of her own about managing agents.

Lord Deben was also supportive, saying, “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.

“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.”

But then BIS under-secretary Viscount Younger of Leckie decided to challenge that statement, saying, “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.”

Baroness Hayter attempted to shoot down the statement that costs for tenants and landlords would rise as a result of passing the amendment, claiming that the cost would be no more than £150, and that no letting agents would be put out of business.

The Viscount also stated, “I can reassure noble Lords that letting and management agents are already subject to consumer protection legislation.”

He asserted that consumers are free to turn to their local Trading Standards officers if they have a complaint. He also pointed out that half of all letting agents belong to voluntary schemes.

Reluctantly, Baroness Hayter withdrew her amendment, but we probably haven’t heard the last of it.

 

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