Amendment 94

Leasehold and Freehold Reform Bill - Committee (4th Day) – in the House of Lords am 5:30 pm ar 1 Mai 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Lord Best:

Moved by Lord Best

94: After Clause 109, insert the following new Clause—“The Regulator of Property Agents(1) The Secretary of State shall establish a body corporate known as the Regulator of Property Agents (“the Regulator”) to regulate property agents in respect of—(a) estate management of leasehold properties,(b) sale of leasehold properties, and(c) sale of freehold properties subject to estate management or service charges.(2) Regulations under this section—(a) must be laid within 24 months of the date of Royal Assent to this Act,(b) must be made by statutory instrument, and(c) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.(3) If, at the end of the period of 12 months beginning with the day on which this Act is passed, the power in subsection (1) is yet to be exercised, the Secretary of State must publish a report setting out the progress that has been made towards doing so.(4) The objectives of the Regulator are—(a) to protect the consumers of services provided by property agents, in respect of—(i) estate management of leasehold properties,(ii) sale of leasehold properties, and(iii) sale of freehold properties subject to estate management or service charges. (b) to set and uphold standards of competence and conduct for property agents in relation to the sale of leasehold properties and freehold properties subject to estate management or service charges.(5) “Property agent” means an individual or body of persons (whether incorporated or not) which carries out the roles of an estate agent as defined in Section 1 of the Estate Agents Act 1979 or of a property manager as defined in Sections 54 and 55 of the Housing and Planning Act 2016.(6) The Secretary of State may provide financial assistance (by way of grant, loan or guarantee, or in any other form) and make other payments for the establishment and maintenance of the Regulator.(7) The Regulator must establish a panel of persons called “the Advisory Panel”.(8) The Panel may provide information and advice to the Regulator about, and on matters connected with, the Regulator’s functions (whether or not it is requested to do so by the Regulator).(9) The Regulator must appoint the following persons to the Panel—(a) persons appearing to the Regulator to represent the interests of—(i) leaseholders of properties managed by property agents,(ii) freeholders of properties subject to estate management or service charges, and(iii) professional bodies and associations representing property agents who manage leasehold properties.(b) the Secretary of State.(10) The Regulator has powers as follows—(a) to monitor, assess, report, and intervene (as appropriate) in relation to the performance of property agents who manage leasehold properties;(b) to determine mandatory qualifications to ensure that those undertaking the activities of a property agent in England have, or are working towards, qualifications that demonstrate competency in respect of the sale or management of leasehold and freehold properties;(c) to enforce compliance with a mandatory and legally-enforceable Code of Practice for property agents selling or managing leasehold properties;(d) to provide guidance to property agents on the regulatory framework for the sale and management of leasehold and freehold properties;(e) to register all property agents complying with the requirements of the Regulator and to revoke the registration of property agents who persistently breach the regulatory framework;(f) to raise a registration fee and an annual fee to pay for the ongoing costs of the Regulator of Property Agents;(g) to review and make recommendations to the Secretary of State for the updating of the statutory guidance that sits alongside the regulatory framework for the sale and management of leasehold and freehold properties;(h) to delegate to designated bodies administrative and regulatory functions in respect of the sale and management of leasehold and freehold properties, as it deems appropriate.(11) The Property Ombudsman and other redress schemes, if any, covering property agents shall provide the Regulator with such information as the Regulator shall request.”Member’s explanatory statementThis amendment seeks to create a Regulator of Property Agents to regulate property agents in respect of estate management of leasehold properties, sale of leasehold properties, and sale of freehold properties subject to estate management or service charges.

Photo of Lord Best Lord Best Crossbench

My Lords, Amendment 94 is in my name and those of the noble Lord, Lord Young of Cookham, and the noble Baronesses, Lady Hayter of Kentish Town and Lady Taylor of Stevenage, and I am very grateful for their support. Before I speak to the amendment, I want to add my appreciation of the life and shock at the loss of Lord Stunell. Andrew Stunell was a terrific advocate for better housing, as a notable Construction Minister in the coalition Government and an eloquent speaker on a range of Bills, not least the Bill we are debating today, which he analysed brilliantly just a month ago in this Chamber. He will be very greatly missed indeed.

Amendment 94 represents the grand finale in our Committee debates on the Bill. It would empower the Secretary of State to establish an independent statutory regulator of property agents who sell and manage leasehold property. It would introduce into law the recommendations from the Government’s own Regulation of Property Agents working group, which I had the honour to chair and which reported in July 2019. The twin objectives of the regulator would be to protect consumers and to raise standards. Although the working group recommended a regulator for all property agents covering estate agents, sales agents and letting agents as well as property agents handling leasehold property, the amendment relates only to the leasehold managing agents, to keep within the scope of the Bill. However, many property agents involved in leasehold sales and management also engage in sales of freehold properties and in the management of rented sector lettings, so would be covered. Moreover, a twin amendment in the Renters (Reform) Bill, due in this House shortly, could extend the regulators’ role to cover agents managing rented properties as well.

The need for regulation was spelled out graphically at Second Reading, and many of your Lordships have shared details of agents’ misconduct brought to their attention. The unsuitability of badly behaved agents ranges from simply not communicating with leaseholders to misleading them and taking advantage of their leaseholder status with exorbitant commissions, charges and fees, not least in retirement housing developments. Although there are some excellent agents providing a good service and value for money, there are also inept, incompetent and exploitative agents whose reprehensible behaviour cries out for proper regulation. The urgency for regulating the sector has now increased, following the passage of the Building Safety Act 2023. This legislation has meant managing agents of blocks of flats taking responsibility for spending substantial sums of leaseholders’ money and of taxpayers’ subsidies to cover remedial building works in blocks of flats. It is now more essential than ever that such responsibilities are exercised only by reputable and qualified professional agents.

There is rock-solid support for a regulator of property agents from the professional bodies and trade associations representing the sector: the RICS; Propertymark; and the Property Institute, which comprises the Institute of Residential Property Management and the Association of Residential Managing Agents. Those property agents who are acting honourably are undermined by the unprofessional conduct of too many. Of course, the organisations representing consumers, such as Citizens Advice and the Leasehold Knowledge Partnership, are extremely supportive of the proposals encapsulated in this amendment.

A regulator would establish requirements for relevant qualifications and continuous professional development and would require adherence to an overarching code of conduct and to subsidiary-specific codes covering the different components of property agency. The regulator would have a full range of enforcement powers, from requiring specific changes to levying fines or removing the licence for a firm or individual to operate. That would provide the same consumer protections as for social housing, with its social housing regulator and Housing Ombudsman, and as for the financial sector, with its Financial Conduct Authority and Financial Ombudsman Service.

As with accountants, lawyers or surveyors, property agents deserve to be respected as professionals with expertise and with the proper attributes that go with professional status. Why would the Government resist a measure that is likely to be extremely popular with millions of leaseholders, which is earnestly requested by those who would themselves be the subject of regulation, and which has been given so much support from this House, particularly following the strong encouragement from the cross-party scrutiny of your Lordships’ own Industry and Regulators Committee last month?

At Second Reading, I provided the—I hope—compelling reasons why there should be no worries about the cost of a regulator or concerns that an ombudsman service could save the need for a regulator. I think that the real reason that the Government are holding back is the fear that there is simply too much work to be done to establish an all-singing, all-dancing regulator of leasehold property agents, so I will reassure Ministers that much progress has already been made in lining up the key components of a regulatory scheme.

First, on a code of practice, existing representatives of the sector have brought together a draft code, led by the noble Baroness, Lady Hayter of Kentish Town, who has been an invaluable supporter of this agenda. That code is ready and waiting for the regulator to accept or amend. Secondly, on the levels and contents of qualifications for managing agents, the Department for Levelling Up, Housing and Communities is active already in devising similar arrangements for those managing properties in the social rented sector, following the Social Housing (Regulation) Act 2023, and the department’s work will do much of the job for leasehold managing agents too.

Thirdly, to provide the necessary training for qualifications, there are already excellent courses on offer in a competitive market where training providers stand ready to expand. Fourthly, at the enforcement level, local trading standards officers already have responsibilities for inspecting and checking on property agents; for example, to see whether they comply with the duty to hold client money protection insurance and professional indemnity insurance. With funding from the regulator, trading standards could expand its existing role.

Finally, on covering the tasks that a new regulator must tackle, there is the option of delegating some administrative or other functions to designated professional bodies, such as the RICS, already operating for a segment of this sector. So we are ready to go. That just leaves the response that there is simply no time to amend the Bill if it is to pass before the forthcoming general election. The issue has been debated repeatedly over the last five years, and the commitment to professionalise the sector has been reiterated in successive manifestos. Have we now run out of time, or can the Minister report some success, not for the first time, in convincing her departmental colleagues to do the right thing? An independent statutory regulator for leasehold property agents would go an appreciable distance to tackling at least some of the extensive problems of the leasehold sector, and would earn the blessing of so many leaseholders who desperately need a powerful consumer ally. I beg to move.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Llafur 5:45, 1 Mai 2024

My Lords, I declare a non-financial interest in having worked with the Property Institute and other groups that have supported this area for many years. Also, as the noble Lord, Lord Best, alluded to, I chaired a committee working on one aspect of this matter, which I will come to shortly.

As the noble Lord said, it is quite unusual for this call for regulation to come not only from the consumers who would benefit but from the professionals already working in the field. It is virtually unanimous; in fact, among the organised groups, it is unanimous that this is the regulation under which they would like to work. The agencies and their representative bodies are waiting for this to happen.

As has just been described, in a way the reasons are obvious, not only outside but within this House. We know that, as was mentioned, the Best report was welcomed, I think universally; the Select Committee on Industry and Regulators has called for it to happen; and in the world outside there is still an expectation—a hope—that this might happen. A number of us want an election soon but we could even put it off—if that would be the only thing needed to get this through, we will put up with more of this Government.

It is fairly obvious that housing is not just bricks and mortar. Homes are fundamental to people’s financial and emotional well-being. Get this right, and their own quality of life improves dramatically. Get it wrong, and it is debilitating, stressful and expensive. It starts, of course, with the purchase, or indeed the sale, of a leasehold property, which is a more complicated transaction than simply buying a freehold house. So even at that stage, transparency, clarity, openness and proper explanation by estate agents are essential, and so, therefore, is the need for their expertise in these specialist areas of purchase and sale.

However, even once it has happened and you are living in the leasehold property, that can be a particularly fraught arrangement. With leasehold management there is a three-way relationship between the landlord, the resident—that is, the leaseholder or the owner—and the managing agent. Marriages with three in are always a bit complicated, but in this case, of course, you have the managing agent, who is appointed by the landlord but who has duties and, even more importantly, a close working relationship with the leaseholder. That adds an element of necessary expertise in how to handle it.

As important is the complexity of the law involved in this. It covers particular rights that are different from those associated with a freehold house. There are the safety issues, which have been well rehearsed in Committee. There are consumer issues and fiduciary duties, as well as myriad external bodies and requirements that have to be met. Frankly, managing agency is no task for an amateur. Agents need to be trained in ethics as well as the law and building regulations, and they need to be checked to ensure that they are fit and proper to handle both people’s money and their safety, and to prepare all the legal and other paperwork essential for running a complex operation. That is why we require regulation and oversight of this important profession.

As was mentioned, a code of conduct is needed across the industry, not simply to provide the requirements on agents but, importantly, to enable consumers to understand and thus to be able to enforce their rights. As the noble Lord, Lord Best, said, a cross-industry group that I had the privilege to chair and whose outcome was welcomed by the department has prepared the code and it is ready and waiting, so the work in setting up this regulatory body would be less than otherwise. It is there, ready and waiting for the legislation to make adherence to that code a legal requirement. That is the key to professionalising the industry and enhancing the experience of all who deal with managing agents—landlords and leaseholders alike.

It is not sufficient, welcome though it might be, to have an ombudsman to adjudicate and put things right when things have gone wrong. We need to prevent problems arising, which means raising standards, ensuring compliance, requiring training and qualification, and continuing professional development in a world of statutory requirements that seem to be changing, not just year by year but month by month, as is the technology involved in building, which we know about.

The Best way is the only way. Let us give the noble Lord what he has been asking for for so long and just get this report into law—let us get on with it. I am delighted to support Amendment 94.

Photo of Lord Young of Cookham Lord Young of Cookham Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I will add a very brief footnote to the excellent speeches made by the noble Lord, Lord Best, and the noble Baroness, Lady Hayter.

The point I want to make is that the market is changing. We are moving away from a position where the freehold of blocks of flats was owned by the Grosvenor estates, Cadogan Estates, the Portman Estate —professional freeholders—and they were well able to choose responsible managing agents and keep an eye on them. We are moving away from that to a position where more and more of the blocks of flats are owned by the leaseholders. It is a trend that I that I welcome—indeed, the Bill accentuates that trend—and eventually we will end up with commonhold. Against that background, it becomes even more important that the managing agents should be professional. The background is changing and the need for this is now much more urgent than it was a few years ago.

I very much hope that the Government will be able to respond to the eloquence of the noble Lord, Lord Best, and introduce regulation of managing agents. However, if they cannot, he hinted at two intermediate steps, which I think the Government might be able to take. One is requiring mandatory qualifications. As the noble Lord said, these have already been introduced for the social housing sector and could be expanded to protect leaseholders and private tenants. The second thing the Government could do, which the noble Lord also mentioned, is to introduce the mandatory code of practice, drawing on his working group on the regulation of property agents—this case was well made by the noble Baroness, Lady Hayter.

The Government could do one final thing which has not been mentioned so far. There is a government document called the How to Lease guide, and they could make that a mandatory document to be shared with consumers who purchase a leasehold property, in exactly the same way in which landlords and agents must provide the How to Rent guide to tenants. Therefore, if my noble friend cannot go the whole hog, I very much hope that she can smile warmly on intermediate steps, which might then pave the way to the final introduction of regulation of managing agents in the very near future.

Photo of Lord Truscott Lord Truscott Non-affiliated

My Lords, I am pleased to follow the noble Lord, Lord Young of Cookham, and I agree with the comments that he just made. I remind the Committee that I have been a leaseholder for around 30 years, and over that time I have dealt with several property management companies.

I wholeheartedly support Amendment 94 in the names of the noble Lords, Lord Best and Lord Young of Cookham, and the noble Baronesses, Lady Hayter of Kentish Town and Lady Taylor of Stevenage. I pay tribute to the dogged determination of the noble Lord, Lord Best, in pursuing the reform and regulation of property agents over a number of years, and, of course, to the sterling work of the noble Baroness, Lady Hayter of Kentish Town.

I fail to see why His Majesty’s Government should not support this amendment in full. I also fail to see why the Government have failed to bring forward their own measures to regulate property agents, which, as we have heard, are long overdue. I know that the Minister will say that this is all very complicated and requires detailed and thoughtful legislation, that she will describe how property managing agents are making voluntary strides to improve their standards and operation, and how there are redress schemes in place. However, I do not really buy that argument. This amendment gives His Majesty’s Government two years to lay down regulations to regulate property agents. That is enough time even for this Government, and if not them, then certainly for the next one.

No other sector I know of handles potentially millions of pounds of other people’s money but is unregulated by statute. The City of London looks at property management companies aghast given the lack of oversight. I will give some practical examples of why property management companies should be effectively regulated, following the comments of the noble Lord, Lord Best.

My first example is relatively positive. I was the right-to-manage director in a mixed development for five years. The block is efficiently run by a professional property management company headed by a surveyor. Legal and other professional advice is sought when necessary and the property agent, appointed by the RTM company, takes instructions from the RTM directors but is very responsive to individual leaseholders on any issues which crop up. However, it was not easy to get to this point. The previous property agent had to be taken to court and sued for, in effect, stealing service charge money, which it was forced to repay. The RTM company was formed as a result, but at great personal financial cost to a number of residents, who were left seriously out of pocket.

In another example in another block, the property agent was undoubtedly a smooth operation. The only problem was that it largely ignored the residents in the mixed development and made it clear that it took instructions only from the freeholder. Residents were charged fees for everything imaginable, including minor refurbishments. Although the service charges per square foot of the building were reasonable, the residents bore an unfair share of them. In effect, they were subsidising a number of commercial units and private members’ clubs. The outcome was service charges which rose by 50% in just two years. For a one-bedroom flat, the service charges were five times that in my first example but in a similar location. When challenged, the property agent told residents that if they could not afford the service charges they should sell up and leave the block. Having failed once to challenge the property agent and freeholder in court—remember that service charges have to be “reasonable” but not “fair”, nor even do they have to be “value for money”—and again at great individual cost, the residents decided that they were in no mood to have another go.

In my last example, none of the property agent’s staff were trained as surveyors or legal property experts—this is a large property management company outside London. Although standards have improved somewhat of late, previously, its management style was unacceptable and unprofessional. The member of staff who previously ran the block on behalf of the property agent took instructions only from one residents’ management committee director. New directors—and there were only two—were actively discouraged. The RMC’s articles of association were ignored. Those property agents came up with a pets policy, as pets were allowed only at the discretion of the directors. That proposed that should anyone request a pet, all their details could be shared by the directors and others on the estate, with no security whatever. I am not a lawyer, but that seemed to be in clear breach of the Data Protection Act 2018 and the GDPR. When that flaw was pointed out, the property agent did nothing.

On another occasion, a property agent staff member threatened a resident with an allegation of criminality, which again was a legal nonsense. As the noble Baroness, Lady Hayter of Kentish Town, said, this is not a role for amateurs. Neither are the current redress schemes fit for purpose. I have pursued one myself. They take many months and, at the end of it, a property agent may just be ticked off. The only answer is proper regulation of property agents, as we have heard and as set down in this amendment, and proper training and qualifications for property management staff.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Llafur 6:00, 1 Mai 2024

My Lords, I apologise to the Committee. From what the noble Lord has said, I realise that I probably should have said that I was a leaseholder when I spoke.

Photo of Baroness Bennett of Manor Castle Baroness Bennett of Manor Castle Green

My Lords, I rise briefly to offer Green support for this clear, obvious and essential amendment, which already has strong support across the Committee.

I want to pick up a point made by the noble Baroness, Lady Hayter, about how both buyers and sellers desperately need confidence and how that confidence is utterly lacking at the moment. A lot of our discussion has focused on the problem of estate management, where there are clear and obviously pressing problems, but to focus a little on sales of properties and the need for some oversight there, I note that, last year, trading standards warned that many agents were not passing on the best offers that they had received from purchasers, as they are legally required to do, because they were getting commission fees from mortgage brokers, solicitors, surveyors and other third parties. They were choosing to go with what would produce a better result for them but a lower price for the seller. The only way that this is generally uncovered is if the would-be buyer who did not succeed in purchasing the property happens to look at the Land Registry sales price, says “but that’s less than I was offered” and creates a fuss. That is a sign of just how utterly cowboy the current situation is without regulation.

A report out yesterday noted that for 34% of the “for sale” stock on some major websites there had been an asking price reduction. People often need to sell for all kinds of reasons—including divorce, bereavement or perhaps because they need more bedrooms for extra children. These are all stressful, difficult situations where delays can cause damage and create uncertainty. We have a cowboy situation out there, and as the noble Baroness, Lady Hayter, said, the people in the industry who want to do the right thing know that there are cowboys out there who are a threat to them. Therefore, the amendment is clearly essential to making our housing sector less of a cowboy environment than it is now.

Photo of Baroness Thornhill Baroness Thornhill Liberal Democrat Lords Spokesperson (Housing)

My Lords, I too support Amendment 94 in the name of the noble Lord, Lord Best, which was so well outlined by him with his usual clarity and reason. It is an amendment that I was determined to put my name to, but its popularity was such that I was too late. However, I listened intently to the informed contributions from the noble Baroness, Lady Hayter, and the noble Lord, Lord Young of Cookham, and look forward to the contribution of the noble Baroness, Lady Taylor. This will therefore be possibly my shortest and easiest contribution to the Bill, simply saying that, between them, the proposers have nailed this issue with an amendment that should be workable and which we hope that they will take forward on Report.

The noble Lord, Lord Best, listed the broad coalition of support for a regulator and indeed it appears that it is ready to go. This is something which the noble Lord has campaigned on for years. His report was widely accepted and praised for its thoroughness and its remarkably workable plan for the way forward, which he has stated in detail. Interestingly, the recommendations of his working group went much further than this amendment, so the movers of the amendment are being pragmatic and measured because they want to see change now—we support that.

I found the contribution of the noble Lord, Lord Truscott, on redress, particularly interesting. It reminded us that, currently, regulation in the property sector is voluntary and sanctions are limited. This Bill will not change that enough. Do your Lordships not think it is shocking that anyone can set up a firm from their bedroom and very soon be handling hundreds of thousands of pounds of leaseholders’ and taxpayers’ money while being largely unaccountable to the leaseholders who, on the whole, do not choose them to manage their block or control their service charges? This cannot be right. An individual can set up in business as a property manager without any formal qualifications, experience or even insurance.

It seems shocking that there has been so much good legislation to protect much smaller sums, such as deposits for renters, but nothing to protect leaseholders’ funds. We have regulations and regulators for individuals and companies handling much smaller amounts of people’s money. Leaseholders are usually required by the terms of their lease to make advance payments towards the service charge and to contribute to a sinking fund or reserve fund. These sums can be substantial, especially if major works are planned, which is why we supported the amendment tabled by the noble Baroness, Lady Fox, earlier in the Bill on consultation on major works. The Federation of Private Residents’ Associations has asserted that there is no other area in the UK in which money is held by a third party that is not regulated—unless somebody can tell me otherwise. The federation suggests that moneys held by unregulated and unprotected third parties may well exceed £1 billion.

If we want to change the behaviour of such property agents, there needs to be a much more professional approach to training and development, as the noble Baroness, Lady Hayter, exemplified well. Mandatory professional standards should be set, along with the oven-ready code of practice.

Even within the sector, the good guys—and there are good ones—do not want the rogues giving them a bad name and tarring everyone with the same brush. It is clear that the Government are procrastinating on this issue, so much so that several years after the report from the noble Lord, Lord Best, very little has happened. The fact that the Government have not taken the opportunity with this Bill to introduce relevant property agent regulations proves that they have probably yielded to the anti-regulation voices among their ranks, despite their acceptance in principle of the case for regulating property agents, which has also been accepted by the majority of interested and affected parties. We are all seeking a solution, and Amendment 94 is certainly worthy of consideration, and we urge the Government to give it that consideration. I look forward to the Minister’s reply and to Report, definitely.

Photo of Lord Thurlow Lord Thurlow Crossbench

My Lords, I have not heard a voice in the Chamber this afternoon against the amendment from the noble Lord, Lord Best. It is such a refreshing amendment, it is long awaited, and we have heard, and we all knew, that his report was kicked into the long grass many years ago by the Government, and that is something of a disgrace. Even in the Levelling- up and Regeneration Bill debates last year, this subject was much discussed. We must not overlook that large cohort of hugely responsible and professional property managers—and there are many—but our focus must be on those who fail to adopt high standards, those who knowingly overcharge, those who take discreet commissions, and those in the pockets of clients with dubious standards.

This subject of rogue managing agents has come up again and again in this Bill; the time has come to act. The amendment clearly has strong cross-party support, and we have heard that the Government want to do it in principle. If the Government really want to do something for leasehold occupiers, this is it: simple regulation of property managing agents and other related property advisers; no one to practise without registration; a no-nonsense, strictly monitored and enforced system of effective supervision; and a simple, advertised complaints procedure for the lessees and rigorous monitoring of those complaints. This amendment has my wholehearted support. I hope the Government will adopt it; if not, I hope it is pressed on Report.

Photo of Lord Hacking Lord Hacking Llafur

My Lords, I do not want to jump in front of my Front Bench, but this is not a Bill that I have followed in detail. I did not take part in the Second Reading, and I have not taken part so far in Committee, but I was in the House this afternoon, and that is why I am standing up to very briefly address your Lordships on Amendment 94, which should be fully supported. I declare a personal interest, and your Lordships will see how I can link that to supporting this amendment. My wife and I are both freeholders and leaseholders of five flats, which are in an adjacent house to our own house. We personally manage them and know all the tenants well, and we try to deal with all their needs and circumstances, but the time will come when we have to sell. It is that stage that I am worried about, to ensure that these leaseholds are properly managed under the auspices of the regulator.

Photo of Baroness Taylor of Stevenage Baroness Taylor of Stevenage Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government)

My Lords, it is a great pleasure to take part in this debate and to hear from such eminent experience across the Committee on this issue. On one of the points made by the noble Baroness, Lady Thornhill, about how far back this goes: one of my very first jobs in the early 1970s was at an estate agent. It was a family business run by somebody who had trained as a journalist and had a career in journalism, but he did, at least in that case, have the grace to train as a chartered surveyor as he carried on his business as an estate agent. You would have thought that things would have changed a bit over the subsequent years—it is quite a long time ago now—and it is ridiculous that it can still happen that people with little experience or qualification can be in charge of huge sums of other people’s money and property, and I hope that we can move matters on, at least in that respect.

First, I thank all the noble Lords who have spoken, but especially the noble Lord, Lord Best, for the work he has done to campaign for and promote a more efficient, effective and secure system of regulation for letting and managing agents over so many years. We are absolutely convinced of the benefits of this and that it will be a hugely positive step for leaseholders, tenants, landlords and, of course, the professionals. There are many professionals who really do not like the rogue landlords and property agents in the business, and all would benefit if this could be put in place. That is why we were delighted to add our name to this amendment, and we strongly agree with what noble Lords have said already on this proposal.

I want to start by quoting the response from the Housing Minister to a PQ on the implementation of the recommendations from the working group led by the noble Lord, Lord Best, which was asked on 15 May last year. The response was:

“The Government is considering the recommendations in the final report on the regulation of property agents from Lord Best’s Working Group. We will continue to work with industry on improving best practice. Announcements will be set out in the usual way”.

I do not know where those announcements got to, but they do not seem to have appeared so far. The amendment from the noble Lord, Lord Best, falls clearly into a first category of “If not now, when?” and a second category of “Please, can we get on with it?”. As my noble friend Lady Hayter pointed out, the ombudsman is there for when things have already gone wrong, and this proposal would, I hope, do the ombudsman out of a job by regulating things so that they do not go wrong. The excellent Library briefing on the subject sets out very clearly the timeline and the issues involved. These go back to a Labour Government report in February 2010 and led to the then Labour Government to agree with

“the emerging consensus around the need to regulate letting and managing agents”.

As we have heard, subsequent Governments have blown very hot and cold on this, but there was a significant swerve towards regulation in 2018 when, following an extensive consultation exercise, the Government proposed to introduce a single mandatory and legally enforceable code of practice covering letting and management agents and that a single overarching regulatory structure would be investigated—that is what resulted in the working group led by the noble Lord, Lord Best.

These proposals have been very long indeed in gestation. There has already been so much work, consultation and industry support, not to mention various reports from the Resolution Foundation, Which?, the Office of Fair Trading, the Competition and Markets Authority, the Royal Institution of Chartered Surveyors and the Property Ombudsman that clearly articulate the need for better regulation. We just cannot see why any further procrastination, dither and delay can possibly be merited. The Property Ombudsman said as far back as 2013 that

“over the lengthy period I have been expressing views on the subject, it has become clear to me that consumer organisations and those sector professional/trade associations such as ARLA and RICS share my view that a form of regulation is very necessary to set a level playing field for those operating in the private rented sector”.

The purchase or rental of a home is one of the key financial transactions in your life. It should represent security and aspiration. You should have the confidence that your financial commitment is matched by the professionalism and high standards you expect of those you entrust with the technical aspects of the transaction. But we are a very long way from that; we are still, as the Royal Institution of Chartered Surveyors described it, dealing with the property industry’s “Wild West”, with many offering as little protection for consumers as they think they can get away with and with the confidence of purchasers and renters at an all-time low. That is why I agree with the ombudsman, who said that, realistically, legislation is the only vehicle that can bring 100% of letting agents within the fold.

For landlords, leaseholders and tenants, we have an opportunity to move forward from the idea that just giving everyone a leaflet will make all the issues go away. As the group led by the noble Lord, Lord Best, recommended, we need the following measures, and I have said before in discussions on this Bill that the extraordinary thing is that they are not in place already. Those measures are an independent property regulator; a single mandatory and legally enforceable code of practice; minimum entry requirements and continuing professional development for property agents; and clarifying processes and charges for leaseholders. I am grateful to my friend, the noble Lord, Lord Truscott, for his graphic illustration of the issues, which I am sure will have touched on many of us in this Chamber; this includes my own family, with both my son and daughter negotiating the experience of renting through agents in London.

We have the opportunity here to implement the very sound recommendations of the working group of the noble Lord, Lord Best, by incorporating them into the Bill as set out in Amendment 94. I hope the Government will accept this and end the decades of delay we have seen on this issue, but if they do not and the noble Lord decides to return to it on Report, he will certainly still have our support.

Photo of Baroness Scott of Bybrook Baroness Scott of Bybrook Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 6:15, 1 Mai 2024

I thank the noble Lord, Lord Best, for his Amendment 94, and for his and other noble Lords’ persistence in pushing for the creation of a new regulatory body to oversee property agents. I put on record my sincere thanks to him for his valuable work on regulation over very many years. I note that he is also a member of the Industry and Regulators Committee, which recently concluded that the case for regulation of the property agent sector still remains. Ministers will respond to the committee in due course.

However, as the noble Lord is acutely aware, the Secretary of State indicated in the other place that he did not consider that this was the right time or the right Bill to set up a new regulator for property agents. I know that he and other noble Lords will be disappointed, but perhaps not surprised, by this. However, the Government remain committed to driving up professionalism and standards among property agents. Leaseholders deserve a good service for the money they pay, whether from their landlord or their managing agent, where one is in place.

The noble Lord once again brought up, as he has many times with me, mandating professional qualifications. This was one of the areas that the Government asked the noble Lord’s working group to look into as part of its review. I assure him that that remains on the table.

At this point, I will respond to the interesting idea from my noble friend Lord Young of Cookham about the How to Lease guide. Interestingly, I spoke to officials about this idea not too many hours ago, building on the guide to renting. That is something that could be put in place. I will work further on it and talk to my noble friend more.

Industry plays an important role in driving up standards, and we welcome the ongoing work being undertaken by the industry and others to support this. This includes the efforts of the noble Baroness, Lady Hayter of Kentish Town, and her independent steering group in preparing an overarching code of conduct. I thank her for that. I know that the Government are very interested and looking at it in much more detail. This is an important development to ensure that all consumers are treated fairly and agents work to the same high standards. I echo what many noble Lords have said. We have some excellent agents in this country who do a fantastic job. The agents we are talking about are the rogue agents, who I know noble Lords are trying to ensure come up to the same high standards. I thank the noble Baroness for her work on this.

I should also stress that measures in this Bill, alongside existing protections and work being undertaken by the industry, seek to make managing agents more accountable to those who pay for their services. That includes making it easier for leaseholders to take on the management of their buildings themselves, where they can directly appoint or replace agents.

However, I recognise the strength of feeling expressed on this issue at Second Reading and today by a number of noble Lords, and the ambition of all noble Lords who spoke to drive up the standards of property agents. The noble Lord, Lord Truscott, the noble Baroness, Lady Bennett of Manor Castle, and others spoke about individual cases where managing agents have been either good, as we heard from the noble Lord, Lord Truscott, or extremely unacceptable.

I will continue to engage with the noble Lord, Lord Best, my noble friend Lord Young of Cookham and any others who would like me to on this issue during the remainder of the Bill’s passage. I know I already have a meeting in my diary with the noble Lord, Lord Best, in a week or so. With the assurance that we will keep working on this, and following what I have said, I hope the noble Lord will withdraw the amendment.

Photo of Lord Best Lord Best Crossbench

My Lords, I am very grateful to all noble Lords who have spoken—all of them in favour of the concept of a regulator of property agents. I think the case is now unavoidable. My especial thanks to the noble Baronesses, Lady Hayter and Lady Taylor, and the noble Lord, Lord Young of Cookham, for supporting this amendment, and to the noble Baroness, Lady Thornhill, who, if we were allowed one more name on the list, would have been there as well. It was great to hear illustrations from real life from the noble Lord, Lord Truscott, bringing a consumer perspective to the story. The noble Baroness, Lady Bennett, shared stories of cowboy agents. I am afraid they do exist, and we should be doing something about it.

The Minister offered me some consolation. We are going to meet again soon, and she recognises the strength of feeling that everybody has been expressing. I thank her for continuing to engage on the subject and I hope there is something we can salvage, before the Bill finally passes, that will at least make a start on this really important mission of creating a regulator to the benefit of the 5 million leaseholders out there. I beg leave to withdraw my amendment.

Amendment 94 withdrawn.

Clause 110 agreed.

Clause 111: Regulation of remedies for arrears of rentcharges

Amendment 95 not moved.

Clause 111 agreed.

Clauses 112 to 115 agreed.

Amendment 95A not moved.

Clause 116 agreed.

Amendments 96 to 105G not moved.

Clause 117 agreed.

Amendments 106 and 107 not moved.

Clauses 118 to 123 agreed.

House resumed.

Bill reported with amendments.