“(1) The Secretary of State must by regulations make provision for implementing the proposals of the Regulation of Property Agents Working Group final report of July 2019 as far as they relate to—

(a) estate management;

(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) shall 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.”—

This new clause would require the Secretary of State to make regulations to implement the proposals of the Regulation of Property Agents Working Group final report within 24 months of the Act coming into force and to report on progress to that end at the end of the period of 12 months.

Brought up, and read the First time.

I beg to move, That the Clause be read a Second time.

I hope that on this occasion the Minister will give me enough reason to withdraw the new clause. I always prefer to withdraw a new clause with a commitment that the Government will introduce what we seek to incorporate into the Bill. New clause 25 raises the important issue of the regulation of property agents, particularly managing agents.

For all that the various measures in the Bill seek to give leaseholders greater control over the buildings in which they live, and to give residential freeholders greater control over their estates, managing agents will remain responsible for day-to-day management in almost all circumstances. In the case of newly empowered leaseholders involved in either an RMC or an RTM company, there will be managing agents they have to take advice from and instruct. The ultimate success of many of the provisions in the Bill, and the extent to which leaseholders experience a tangible improvement in the quality of the services they receive, is dependent on the performance of those managing agents.

In its current form, the Bill contains no measures designed to prevent bad practice and improve performance in the industry. We believe that that issue should be addressed. We know that there are good managing agents who work hard to ensure that residents for whom they are responsible are safe and secure, and that the homes that they manage are properly looked after. However, we also know that there are a great many substandard agents whose behaviour reflects poorly on the industry as a whole.

If property agency were a well-functioning market, there would be no need for regulation—managing agents providing a bad service would eventually be dismissed, struggle to secure new contracts and go bust, and in instances where such companies broke the law, they would be investigated and prosecuted—but property agency is not a well-functioning market. In the main, residential leaseholders and freeholders do not choose and cannot easily remove poorly performing managing agents, and they do not have access to the information required effectively to hold such agents to account.

As we have repeatedly argued in recent years, the case for doing more to protect leaseholders from poor service and exploitation at the hands of unscrupulous managing agents by means of regulating the industry is extremely strong. In our view, the alternative—seeking to rely on incremental improvement, the sharing of best practice in the industry and the ability and willingness of RTMs and RMCs collectively to weed out poorly performing agents—is bound to fail.

The Government clearly recognise that it is a problem that currently there is no overarching statutory regulation of managing agents in England, and that the existing powers under consumer protection legislation do not provide leaseholders with sufficient protection. That is why, in their response in April 2018 to the “Protecting consumers in the letting and managing agent market” consultation, the Government committed to regulating managing agents to

“protect leaseholders and freeholders alike.”

It is why they proposed to introduce a single mandatory and legally enforceable code of practice covering managing agents as well as letting agents, and it is why they established a working group and tasked it with bringing forward detailed recommendations on how a new regulatory framework for property agents should operate.

The working group was chaired by a respected Cross-Bench Member of the other place, Lord Best, and its membership included a number of distinguished professional bodies. It issued its final report in July 2019, which included a series of proportionate and sensible recommendations with appropriate transitional and grandfathering arrangements as necessary, designed to

“prevent bad practice and drive cultural change within the industry, focussing on prevention rather than enforcement after the event”.

However, 55 months on, the Government have done nothing whatever to progress the implementation of those recommendations. Not only is the Government’s general procrastination on the issue a matter of regret, but their decision not to take the opportunity to use this Bill to introduce relevant property agent regulation is incomprehensible, given the extent to which it would help to ensure that many of the provisions in it operate effectively. We believe that Ministers should think again.

The case for regulating property agents has been accepted in principle by the Government. There is extensive support for it, not just among leaseholders and residential freeholders, but in the sector itself, as attested to by Andrew Bulmer, CEO of the Property Institute, and others in our evidence sessions. The blueprint for making it a reality is ready and waiting to be implemented in the form of the working group’s detailed final report. All that is required now is for Ministers to determine that the Government should use the Bill as the legislative vehicle for honouring the commitment they made in 2018 to regulate managing agents to protect leaseholders and freeholders alike.

Although the Government have had the working group’s final report for more than four and a half years, we appreciate that introducing an entirely new regulatory framework is not without challenge. They may need to consider carefully how best to implement a number of the recommendations or how to appropriately phase in some requirements. They might even have good reason to refrain from implementing a limited number of the specific proposals made by the working group on the grounds that they are not necessary or are too burdensome.

We have therefore deliberately not sought to compel the Government to bring each and every one of the recommendations made by the working group into force on Royal Assent. Instead, new clause 25 would give the Government two years to implement the working group’s proposals as far as they relate directly to matters in the scope of the Bill, with a requirement to report on progress to that end after 12 months to ensure that sufficient progress is being made. We think that our new clause is a necessary and reasonable measure. I urge the Minister to accept it.

I will not detain the Committee particularly long on this provision. I regret that we will not be able to accept new Clause 25, for two reasons. First, I accept that people come down in different places on the use of broad Henry VIII-type powers, but we are not sure that those would be proportionate here. This measure concerns a considerable framework that would require a significant level of scrutiny to make it work. We are not convinced that it would be agreeable or acceptable to the Delegated Powers and Regulatory Reform Committee, either.

Secondly, the new clause relates to an area that has been under debate for a number of years, as the hon. Member for Greenwich and Woolwich has outlined, and we think that it is without the scope of the Bill. It is a significant area on which further consideration is needed, and we do not think that there is space for that among all the other discussions. That will ultimately be a matter for the House to determine, but the Government do not think that this is the place to do it, given its significance and given the significance of the other things that we are trying to bring forward in the Bill.

I expected a little more from the Minister, because the Government have accepted in principle that property agents need to be regulated. We think it important that this matter be discussed in connection with this Bill, and that some form of regulation be introduced. As I say, the effective functioning of many of the provisions in this Bill will rely on the standard of managing agents being driven up, and on substandard agents being driven out of the market.

At the moment, all the Minister is saying is that the lack of an overarching regulatory framework in this area is fine. The Government have had four and a half years and are comfortable with taking many more years to come to consider this matter. From our point of view, that is not good enough. The Government have had the working group’s report for some time. They should have made better progress in implementing at least some of its recommendations, if not the vast Majority of them. I will press new Clause 25 to a vote.

I should put it on record—just in case, although it was many years ago—that I used to be an estate agent. I should probably make that clear.

Dear me—even lower than a politician.

Indeed, and via banking.

Well, that’s an admission.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 5, Noes 10.

Question accordingly negatived.