Housing and Regeneration Bill
2:00 pm
Lord Best: Just to finish my point, Sir George, on what the money has done. It has definitely had an impact on house prices. Some of the bubble that is about at least to deflate, if not burst, was created by the £120 billion of extra funding from those people. Remember, housing associations have raised only about £35 billion of private money. The buy-to-let people have raised £120 billion in about six years. When that much money chases the same number of houses that were there before, it is bound to have an inflationary impact.
There is also the problem that first-time buyers have been driven out. First-time buyers have dropped from 40 to 25 per cent. of the purchasers of new homes. So, scaring off some of that investment, which is not something that we would have dared to do for 50 years, would be great. To ease back on it would be a good thing.
As to how that could be done, I have just gone on to the council of the ombudsman for estate agents. New legislation means that, from April, a person cannot be an estate agent unless they belong to an ombudsman and redress scheme so that there is somebody to complain to. Estate agents must sign up with an organisation with whose judgment they must accord. If they misbehave in any way, they will be fined, and they can even be struck off. They will be referred to the Office of Fair Trading and could be told that they are out of the scheme. From April next year, if they are out of the scheme and neither the ombudsman or a redress scheme will have them, they have to take their sign down and not sell any more houses—they are out.
However, a letting agent—some estate agents are also letting agents, in a rather complicated way—can go and put their sign up now. They need no qualifications and they do not have to have done anything before. People can be a letting agent tomorrow and take serious sums of money in deposits and landlords’ rents. We do not have any regulation of letting agents.
Some of the taxi drivers use a letting agent to do the job for them, others do not. One whom I sat behind the other day said, “I am not paying 12 per cent. to some agent. I can get down there at least once a fortnight if the plumbing goes haywire or something.” But whether it is the landlord or the letting agent on behalf of the landlord, the starting point is that they need to be part of either an accredited scheme, or a professional body that has a code of conduct that it will apply. Martin Partington of the Law Commission advocates that in his report. I have discovered that the associations and federations that represent private landlords—they represent only a small number of private landlords because a lot of people will not join—believe in regulation, too. I chair the private rented sector policy forum, which is made up of landlord and tenant groups. The landlord groups agree with the tenant groups that you need some regulation to keep out the cowboys and to bring some formality into the wild west that is the private rented sector. An accreditation scheme does not need to be so frightening that proper investors do not actually prefer it to a system that is totally chaotic. We will see all kinds of problems now that some of this buy to let has unravelled.