Briefing note on the consultation on Code of Practice for residential property agents
In July 2019, The Regulation of Property Agents (RoPA) working group produced a Report on the regulation of property agents which recommended introducing a new regulatory framework for all those carrying out property agency work which would be governed by a new public body established by the Government as Regulator.
A RoPA “code steering group” was subsequently set up in December 2019 to develop a code of the standards envisaged by the RoPA working group. The steering group has produced a draft of the overarching code and the RICS and The Property Ombudsman (TPO) are currently consulting on it. The consultation opened on 20 July 2020 and closes on 4 September 2020.
The draft code sets out the “overarching principles that underpin the standards of professionalism that the Regulator and the public expect of residential property agents”, which apply to conduct and behaviour and provide a framework for ethical and competent practices to estate agents across the UK, letting and managing agents in England (as policy relating to letting and managing agents is devolved in Scotland, Wales and Northern Ireland) and all others carrying out residential property agency work.
The code will apply to:
- Property sales/purchases
- Property lettings
- Property management
- Property auctions
- Property guardians
- Rent-to-rent arrangements
- International property agents
It is proposed that the overarching code will sit above the following sector-specific codes due to be developed later this year, which will set out what consumers can expect from agents when they provide a specific service:
- Residential Property Sales – Estate Agents
- Residential Property Lets – Letting Agents
- Residential Leasehold Management – Leasehold Management Agents
- Commonhold Management – Commonhold Management Agents
- Retirement Housing Management - Retirement Housing Managers
- Property Auctions – Auctioneers
- Property Guardian Services – Property Guardian Companies
- Residential Property Buying Services – Buying Agents
- Build to Rent
Agents will be required to exercise their own judgment in applying the principles and standards within the code and bear in mind their responsibilities when dealing with clients. A serious failure to meet these standards, either in isolation or due to a persistent or concerning pattern of behaviour, may result in regulatory or criminal action being taken against an agency and/or its staff.
Section 1 of the Code sets out the principles agents must comply with when dealing with landlords, leaseholders, tenants and others. The principles include:
- Agents must act legally, ethically, with honesty and integrity.
- Agents must seek to avoid conflicts of interest, and where this is unavoidable, declare all conflicts of interest and ensure these are managed properly.
- Agents must treat all consumers fairly and equally.
- Agents must comply with all relevant legislation.
- Agents must act with due skill, care and diligence.
- Agents must communicate clearly, accurately and transparently to represent correctly their service or product.
- Agent must report breaches of the relevant code(s) to the new Regulator.
- Agents must be open and transparent with the new Regulator about matters that might affect their or others’ trust in the profession.
- Agents must disclose and report any information relating to a property that could threaten a resident’s safety or does not conform to relevant mandatory property standards.
Section 2 of the Code sets out the principles agents must comply with when managing business and staff and includes:
- Agents must manage their businesses and staff effectively.
- Agents must make appropriate arrangement to protect consumers’ money.
- Agents must maintain appropriate accounts and records of their business activities.
- Agents must ensure that all staff are qualified and capable to handle responsibilities delegated to them.
- Agents must handle information sensitively and in accordance with data protection legislation.
- Agents must have effective consumer complains procedures in place.
These principles also have sub-principles which set out how the agent must comply with the principles.
Baroness Hayter, the Chair of the steering group, has commented that “The new code of practice will look to set standards at a higher level than currently legally set. The ambition of the code is that it will become a requirement for obtaining a licence to practice in the future, which will increase trust across the sector”.
It is important to note that the code is only in draft format and would be regulated by a new regulator that has not yet been established. Those involved in residential property management may wish to engage with the consultation which gives a clear indication of the direction of travel.