Regulation of property agents - what will it look like?
I was fortunate enough last week to attend the Law Society Property Section Conference and to catch the presentation by Lord Best. Lord Best is the chair of the working group tasked with setting up the Regulation of Property Agents (ROPA).
The message from his presentation was clear; regulation is coming. Improving the conveyancing process is high on the Government’s agenda and introducing new rules for property agents is a quick win.
Before delving into the key points of Lord Best’s presentation, it is worth looking at the current legislation. The Estate Agent Act 1979, among other things, prohibits ‘unfit’ persons from carrying estate agency work (such as those convicted of a fraud offence), sets out restrictions on the use and holding of client money and details the information an estate agent should give to a client. The Act is enforced through Trading Standards, but more effectively, estates agents have joined Ombudsman schemes. Lord Best mentioned that this method of regulation is not doing enough to raise the standards of the profession.
ROPA will include and expand the obligations under the existing legislation. It will include letting and managing agents as well as estate agents. However, Lord Best made clear it would not include AirBnB or similar, private Landlords or Freeholders. He made no mention as to whether it would extend to a Right to Manage Company.
The regulation will affect both businesses and individuals. Lord Best spoke of the requirement for businesses to be licensed. This is to ensure the end of phoenix companies, closing one day and opening under a new name the next. It is assumed that the licence will not be assignable.
During the parliamentary discussions for the 1979 Act, Mr Alexander Fletcher (MP for Edinburgh North) said:
‘Whereas the Government can determine the rules under which estate agents may conduct their business, entry qualifications must be a matter for the estate agents themselves. I think that this argument applies to any professional body’
The new regulation will turn this on its head, requiring individuals to obtain a qualification. The regulator will decide the syllabus.
Lord Best indicated that there will be no grandparenting rights. This means an agent with many years of experience will still need to obtain the qualification. This may result in a number of experienced people leaving the profession. There will also be an obligation to complete Continued Professional Development and training.
There will be a set Code of Practice with overarching responsibilities, which include points of integrity, quality, communication, client money, record keeping, delegation, equality, information handling, training and dispute resolution. There may be further Codes of Practice particular for the work carried on by the business.
There was an emphasis on providing information to buyers at the outset, particularly relating to leasehold property. This may see a shift to instructing solicitors early to ascertain this information before the sale is agreed.
We were assured that none of the regulation would directly affect solicitors, but we would under a duty to report any breaches of the Code. Unlike the current Ombudsman system which only accepts reports from consumers, breaches could be reported by solicitors, other agents or any other party. This may lead to some vindictive reports.
Although this seems a substantial change for property agents, it may still be a few years until this comes to fruition. Lord Best’s working group have made recommendation, but the final legislation may look entirely different. In the meantime, I recommend reading the work group’s final report as a flavour of what’s to come.
