Letting and managing agents: first steps towards regulation of conduct

On 16 April 2013, the government tabled draft legislation designed to open the way for better regulation of letting and managing agents. Amendments to the Enterprise and Regulatory Reform Bill will permit the Secretary of State to introduce a requirement that letting and/or managing agents of domestic property must belong to a redress scheme. This might be a private or a government-administered scheme. The proposals do not extend to letting agents who deal with commercial property.

The amendments are intended as a substitute for the House of Lords proposal that letting and managing agents should be subject to the Estate Agents Act 1979. That Act imposes wide ranging requirements, including the need to belong to a redress scheme.

A recent OFT report on the Lettings Market recommended that the government consider whether to require agents to sign up to a code of practice or join a redress scheme. The amendments to the above Bill pave the way for this. The Under Secretary for the Department for Business, Innovation and Skills (Jo Swinson) said:
 There would be a consultation first, but no draft consultation paper yet existed.
 The OFT recommendations would be taken into account in the drafting of the secondary legislation.
 The government intends to introduce that legislation as soon as reasonably possible.

The draft clauses set out what will qualify as “lettings agency work” and “property management work”, and permits the secondary legislation to impose sanctions such as civil penalties, criminal offences or orders prohibiting any offending agent from further work in their field. Such steps will no doubt be welcomed by landlords.