New clause 1
Consumers, Estate Agents and Redress Bill
5:45 pm
Mark Prisk (Shadow Minister (Small Businesses and Enterprise), Trade & Industry; Hertford and Stortford, Conservative)
New clause 1 seeks to bring the business of lettings agencies within the Bill and to regulate an industry that now handles over £12 billion of people’s money annually and yet, ironically, it is an industry that is without the redress that we have all discussed in a number of debates about the Bill.
That anomaly is not understood by the public, especially when residential sales and lettings are often handled by the same agency—by the same people in the same office. Without including residential lettings in the regulations set out by the Estate Agents Act 1979 and therefore in the Bill, we would, in seeking to promote the arguments for redress schemes and all the other changes that we have discussed, only be doing half the job.
The Conservatives are not the first people to seek this updating of the law. Tenants’ groups, for example, want to see this change and so do a majority of the principal property organisations, including the Royal Institution of Chartered Surveyors; the National Association of Estate Agents; the British Property Federation, and the Residential Landlords Association. All these organisations wish to see the law updated.
At present, lettings agents can get qualified, but it is not obligatory. The British Property Federation tells me that an average agent might handle in the region of 150 to 200 properties worth about £30 million in rent, and yet there are no regulatory rules or codes of practice that he or she is required to follow and no obligation to handle complaints appropriately or to be part of a redress scheme, all of which we have applauded and agreed on in the Committee.
Of course, many tenants get caught out. I know from my own citizens advice bureau how some agents in this market behave. Indeed, the National Association of Citizens Advice Bureaux tells me that roughly 4,500 negative inquiries were made against lettings agents in any typical year in the last few years. Very often, such concerns are raised by some of the most vulnerable members of society. Indeed, the National Association of Estate Agents, which is a reputable organisation, says that the majority of complaints that it receives about its members concern the lettings sector.
I am sure that Ministers will say to us—we heardthe beginnings of their argument earlier—that the Government are putting in place, for example, the tenancy deposit protection scheme, and that is being put into practice. That scheme is welcome, but it only applies to deposits and it provides no mediation for the many other kinds of disputes that arise, which we have discussed in other debates. Therefore I believe that we need to go further.
New clause 1 would amend section 1 of the Estate Agents Act 1979 to extend the definition of estate agency work to include residential lettings and management. Some of the scams that are perpetrated in this market include, for example, charging both landlords and tenants for the same service; charging for simple procedures that are already covered by a landlord’s management fee, and charging exorbitant fees for basic functions. There are a string of examples; perhaps the best known are outlined on theGuardian Unlimited website. For example, someone was once charged £60 simply for the process of administering VAT; £150 for a cleaning fee; £150 for a credit check, and £100 for an administration fee. I think that the hon. Member for Richmond Park referred to some of these examples before. All of those charges were made without good reason.
It is true to say—I think that the Minister alluded to this before—that the national approved letting scheme sets a minimum service standard and seeks to ensure financial probity in this market. However, there is no obligation on companies to join. Equally, although professional bodies exist and maintain good standards, 60 per cent. of letting agents are neither in NALS nor a member of those professional bodies. That is one of the principal reasons why the industry continues to attract the unscrupulous, and the industry recognises that.
The new clause would bring residential lettings within the established legal framework. It would ensure that residential sales and lettings were regulated in exactly the same way; it would give trading standards officers and the Office of Fair Trading the powers that have, as we all recognise, helped to tackle the issue of rogue estate agents in respect of sales; and it would mean that the improvements included in the Bill would apply to the whole of the residential market rather than just half of it.
As a Conservative, I am instinctively cautious about arguing for more regulation. However, as a chartered surveyor and a constituency Member of Parliament, I know that we need to put lettings on the same regulatory footing as sales. The fact that the National Association of Estate Agents, the Royal Institution of Chartered Surveyors and the rest of the industry agree shows that the measure is long overdue.
On lettings, let me put the argument in the words of Shelter, which says clearly:
“Shelter sees first hand the negative consequences of high letting agent fees on people who are already struggling to pay private rented sector rents. This bill provides an opportunity to improve regulation of this sector and ensure consistency and affordability of letting agent practice.”
That is the important issue that I wish to address through new clause 1, which deals with bringing residential lettings in line with all the things that we have said that we believe are good for sales. Through new clause 3, we seek to extend what we mean by estate agency work.
The Act is 28 years old. I mean the 1979 Act, not the Bill that we are discussing, although I appreciate that, having sat for three days, some Committee members might feel that it is indeed 28 years old. I suspect that I might have contributed to that sense of slow passage of time—