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How to Almost Regulate a Profession*

By D

It comes as something of a surprise to many people that there is no formal regulation of lettings agents or any form of structured consumer redress of protection scheme. Apparently, this is something that also bothers our elected representatives, or some of them…a little bit.

Some of the aforementioned elected representatives were seeking to use the Enterprise and Regulatory Reform Bill which is currently in Parliamentary ping pong as a vehicle to do this. I would try to explain what this Bill is actually intended to do but in all honesty it is such a hodge-podge of items the list would extend well beyond your reasonable tolerance. Naturally, this sort of Bill tends to become a vehicle for every interest group in Parliament to push one of their pet projects. This is what has happened with regulation of letting agents.

In the Lords a number of amendments were pushed forward, the most enduring of which was to extend the Ombudsman schemes for estate agents created by the Consumers, Estate Agents and Redress Act 2007 to lettings. The government opposed this amendment and has had it booted out by the Commons, instead wheeling in an amendment of its own which permits the Secretary of State to make an order requiring letting agents to belong to a redress scheme.

What this order will look like is unclear. It appears that a consultation is to come. However, Jo Swinson, for the government did perhaps drop a hint when she indicated that the schemes would “ensure that tenants have access to redress”. There was no specific mention of landlords. How such a scheme can impose a new legal duty on letting agents to provide tenants with redress when there is no legal relationship between tenant and agent remains to be seen. The consultation should be interesting.

*Apologies for the sarcasm in this post but I have started to develop a high level of frustration with ill considered and last minute amendments by governments which touch on housing and property matters.

D is a solicitor specialising in landlord and tenant matters with a London firm.

1 Comment

  1. dave

    I’ve been very rude to Jack Dromey on Twitter about this and the debate he sought to engineer in the Commons on letting agent regulation. He has been seeking credit for Labour for all of this, having brought together a coalition of industry organisations in its favour. The problem is that such a coalition has been in place for a while, and certainly when Labour were in power; as the Law Comm pointed out in 2008, there was considerable debate during the passage of the Consumers etc Act 2007 through Parliament as to letting agents inclusion, but they weren’t – the government voted against it. While there was considerable disagreement between Rugg and the Law Comm about housing law reform, the one thing on which they all agreed (including New Labour in their successive consultations) was about regulation of letting agents. In short, there was consensus in the 2000s (and, I suspect, probably in the 1990s). The failure of New Labour in this respect was evident. Dromey needs to recognise this, rather than crow about a new consensus and a symbolic debate.

    That’s not to say that the Coalition should be patting themselves on the back. This proposal seems to offer the worst of all worlds – a kind of regulation lite in a sub-sector where amateurism is rife, and where it may well be that the worst abuses lie (of course, we don’t know because the sector is largely unregulated – just 50% of letting agents belong to a self-regulatory body and, further, the effectiveness of such bodies is at best uncertain). We should not have expected anything more, I guess, but after the event intervention doesn’t really help anyone. There is a lot to say for the Welsh and Scottish Governments’ approach. But we can’t really expect the Westminster Parliament to go that far – they (ie all mainstream parties) have bought into the line that regulation stifles the sector which seems to me to be the product of the line of thought which developed during the 20th Century and which derived from the argument against rent control (about which the evidence is now rather more nuanced) and broader frames within policy-making (“better regulation” and all); it may, of course, be why we are in the mess we are in.



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