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Proposed Regulation of Property Agents

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The Government has now received its report from The Regulation of Property Agents (RoPA) working group, which the Government had commissioned last year. The Government asked the RoPA to advise them on whether “Property Agents” in England (which includes letting agents, managing agents, estate agents, online agents, and auctioneers) should be regulated by an independent regulator, with mandatory qualifications and a code of practice and how these proposals would operate in practice.

The working group was made up of members from various institutions and associations, including the Royal Institution of Chartered Surveyors (RICS), the Association of Residential Letting Agents (ARLA), and the National Landlords Association (NLA).

Any person can currently operate as a managing agent, letting agent, or estate agent in England without having any qualifications and without having a licence. This has resulted in bad practice within the industry and a distrust in Property Agents.

Whilst statute does regulate estate agency practices in England to an extent, there are no regulations in force in England which regulate letting agents and managing agents, although some letting and managing agents do follow voluntary codes of practice by virtue of being members of associations such as ARLA and NLA. The report concluded that property agency is an imperfect market for two reasons: 1) Residents do not choose and cannot easily remove an agent; and 2) owners do not have the information to negotiate effectively or hold agents to account. As a result, change is needed.

The RoPA’s report recommended the following:

1) There should be a new proposed regulatory framework for all Property Agents in England. The Government should create a list of ‘reserved activities’ which can only be performed by licensed Property Agents at a regulated firm.

“Property Agents” does not include property portals such as Rightmove or Zoopla or the short-let sector (Airbnb), but the report recommends that legislation should allow for future regulation of landlords and developers.

The regulator should be a new public body which would have the power to enforce the new regulatory framework and take action against Property Agents who fail to comply.

2) All property and qualifying agents should be required to hold and display a licence to practise from the new regulator. Before obtaining a licence, the agents would need to comply with their legal obligations and be subject to a fit-and-proper person test.

3) There should be a single, high level code of practice which sets out the principles applicable to all Property Agents which is set in statute.

4) There should be mandatory qualifications for all licensed agents carrying out ‘reserved activities’ and different qualification levels for those in the industry with compulsory training to continue professional development for all staff levels.

Draft legislation is likely to be introduced to regulate Property Agents, which will incorporate the RoPA working group’s recommendations once parliamentary time allows. A copy of the full report can be found here.

Are you a Property Agent? Do you welcome the recommendations set out in the report? Your comments are, as ever, welcome.

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