Report paves way for significant changes for property agents in the UK
Far reaching changes are needed for property agents in the UK including stronger licencing, a new code of practice, higher qualification standards and a new independent regulator, according to a new report.
The Regulation of Property Agents Working Group, set up by Government, says that taking account of devolutionary matters, a new proposed regulatory framework should cover estate agents across the UK and letting and managing agents in England.
The report says:
‘We recommend that all those carrying out property agency work be regulated, including auctioneers, rent to rent firms, property guardian providers, international property agents, and online agents.’
But it does not recommend that regulation should be extend to property portals such as Rightmove, which is says do not perform agent functions, the short let sector, such as AirBnB, which it says would add complexity to the new regulator as it becomes established, and local authorities acting as letting or managing agents, although it would expect their staff to be appropriately qualified.
But it recommends that the legislation required to regulate property agents should allow for future extension to the scope of regulation, for example to include at a future point regulation of landlords, freeholders and developers, as well as retirement housing managers and Right to Manage companies.
The report says that to clarify the functions of a property agent, the Government should create a list of ‘reserved activities’ which can only be performed by a licensed property agent at a regulated firm. The new regulator’s scope should extend to both licensed agents as individuals and regulated agencies as firms.
To confirm appropriate qualifications and credentials, property agencies and qualifying agents should be required to hold and display a licence to practise from the new regulator. Before granting a licence, the new regulator should check that an agent has fulfilled its legal obligations, such as belonging to a redress scheme and submitting a copy of their annual audited accounts to the new regulator, and that they have passed a fit and proper person test.
‘We recommend that the new regulator should be able to vary licensing conditions as it sees fit and that it maintains accessible records of licensed property agents.’
While the Government has already committed to requiring that letting agents adhere to a code of practice, the report recommends that all property agents be required to do so and suggests that there should be a single, high level set of principles applicable to all property agents which is set in statute.
It points out that qualifications provide agents with the skills they need, provide a mark of competence to reassure consumers, and require commitment from agents. In the new regime, every property agency should be responsible for ensuring their staff are trained to the appropriate level and clear oversight arrangements are in place for junior staff. To ensure levels of qualification are appropriate yet proportionate, the working group recommends that licensed agents should be qualified to a minimum of level three of Ofqual’s Regulated Qualification Framework and company directors and managing agents should be qualified to a minimum of level four in most cases.
The report says:
‘While there are many roles within property agency businesses, mandatory qualifications should apply only to licensed agents who carry out reserved activities. The new regulator should set and periodically review a modular syllabus for property agent qualifications, to be delivered by separate providers.
‘The new regulator should also work closely with Ofqual to develop a robust system of quality control. Continuing professional development should also be a mandatory requirement for licensed agents.’
When it comes to leasehold and freehold charges, it says that the new regulator should be given a statutory duty to ensure transparency of leaseholder and freeholder charges, and should work with the sector to draw up the detail of the regulatory codes to underpin this aim as it applies to property agents.
Nigel Howell, chief executive at FirstPort, said that the significance of this report shouldn’t be understated.
Nigel Howell said:
‘Bold and balanced regulation for residential managing agents can address many of the most common concerns in our property system, whether leasehold or commonhold, by mandating that property agents provide greater choice to residents about their homes, explain financial matters more clearly, and improve overall standards.
‘The measures proposed by the working group will significantly strengthen the principles of good practice already adopted by the best operators in the sector, while exposing the worst excesses and weakest performers. By establishing an independent body, appointed to oversee every member of the industry, this will ensure all those who discharge responsibilities for people’s homes are properly trained, qualified and licensed under a single set of rules.
‘As an industry, we need to earn the confidence of our customers. It’s particularly pleasing to see the report building on and strengthening the existing regulatory framework, paving the way for a swift route to change and removing the requirement for a raft of slow-moving reform legislation.’
It is a significant moment for those in the property industry and a huge leap forward in stamping out bad practice, according to Mark Hayward, chief executive of the National Association of Estate Agents (NAEA).
Mark Hayward said:
‘We have long called for Government intervention to ensure everyone in the industry is licensed, adheres to a strict code of practice and holds at least a Level 3 qualification (A-level). Following the extensive considerations by the working group, it is now for Government to create the structures for a properly regulated industry, whose professional knowledge and skills are trusted and respected by all.
‘These are substantial changes which will require agents to start making preparations now to ensure that they are well placed for when these proposed qualification requirements are introduced. While we anticipate that the need for property qualifications will be phased in, we advise agents to get ahead of the competition and to stand out by adopting the new requirements early.’
Mike Smith, Head of Propertymark Qualifications, believes it is good news for raising professional standards in the industry.
Mike Smith said:
‘We will be aiming to work closely with the regulator, to share our expertise and to help set the curriculum. If any gaps emerge between the existing qualifications and the regulator’s curriculum, we will support learners with bridging or top up programmes to ensure those with existing qualifications can be confident that they are compliant.
‘Propertymark Qualifications have already been checking that there will sufficient capacity in the assessment and training infrastructure to ensure that there is flexibility regardless of where agents are studying in the UK.’
The awarding body, which is regulated by OFQUAL, Qualifications Wales, CCEA and a recognised provider of SCQF qualifications for agents operating in Scotland, saw a 759% increase in learners completing the required qualification in Scotland following the announcement of plans for regulation.
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