House of Lords calls for property agent regulation

The House of Lords Industry and Regulators Committee has recently concluded an Inquiry into the regulation of property agents.  In an open letter to Michael Gove dated 22 March 2024, the Inquiry has recommended regulation of property agents.  The letter points out that the Government established a Working Group on the Regulation of Property Agents chaired by Lord Best which published its final report in July 2019 recommending regulation by means of operating a licence scheme for property agents accompanied by mandatory codes of practice and qualifications to obtain a licence.  However, there have been no further developments since then.

In summary, the Inquiry recommended:

• Legislation to introduce a new regulator to drive up standards and to enforce against agents engaging in bad practice;
• The Government publish a full response to the final report of the Working Group on the Regulation of Property Agents;
• The introduction of an overarching code of practice with separate more detailed codes of practice for different areas of property agent practice;
• Mandatory qualifications for property agents carrying out certain activities;
• Any new regulator should work closely with existing redress schemes and local enforcement authorities;
• There should be a single ombudsman and redress scheme for property agents;
• The new regulator to fund its activities through fees, charges or a levy on those it regulates.

The Leasehold and Freehold Reform Bill is making its way through Parliament.  Currently, this contains no reforms concerning the regulation of property agents, an omission which was highlighted during the debates in the second reading of the Bill in the House of Lords on 27 March 2024. 

No doubt freeholders, investors, and other key stakeholders in the residential property sector await the Government’s further response, following this Inquiry.  The Inquiry noted that the Government has not taken forward the recommendations of the Working Group since 2019 nor formally responded to those.  It therefore called upon the Government to do so.  With a General Election looming within the next 12 months, only time will tell whether the Government can squeeze in wholesale regulation of property agents into its ambitious existing plans for reform of Assured Shorthold Tenancies in the Renters Reform Bill and for leasehold and freehold reform in the Leasehold and Freehold Reform Bill.