The government has committed to mandatory licensing and qualifications for property agents as part of plans to introduce independent regulation of the sector – but key details over how the new regime will operate have yet to be revealed.

Estate agents, letting agents and property management agents will be required to obtain a licence and hold appropriate qualifications, with a new independent regulator given powers to set codes of practice and remove licences where required standards are not met.

The announcement represents a significant move towards statutory regulation following years of debate over professional standards in the property sector.

However, the government has not yet set out qualification levels, licensing costs, implementation dates, transitional arrangements or precisely which activities and individuals will fall within the regime. It has also not confirmed the identity of the regulator.

REGULATORY COMMITMENT

The move goes further than the government’s previous home buying and selling reform roadmap, which proposed consulting on mandatory qualifications for estate and letting agents.

Plans to regulate the sector have been under discussion for several years, with the Regulation of Property Agents working group recommending an independent regulator, mandatory code of practice and minimum qualification requirements in 2019.

Housing Secretary Angela Rayner (main picture) told the Labour Party conference that professional businesses were being undermined by unqualified and unregulated operators.

“Undermined and undercut by far too many cowboys, crooks and con artists.”

She said: “But it’s not just some freeholders that can exploit leaseholders and tenants. Estate agents, letting agents and property management agent can do to.

“A sector with many decent businesses of course. But they are undermined and undercut by far too many cowboys, crooks and con artists. And homeowners and renters and leaseholders pay the price through hidden fees and traps.

“People who should be excited about buying a home are tricked into using overpriced in-house services. Unqualified, unlicensed and unregulated agents are taking thousands from their clients and mishandling their money. With no transparency or accountability, vultures can take advantage.

“Conference we will legislate for an independent regulation to reign these cowboys in. They will be required to follow the rules and if they don’t, their licenses will be taken away.”

MORTGAGE MARKET QUESTIONS

For the mortgage sector, the eventual scope of the regime will be important given the increasingly close relationship between estate agencies and mortgage advice businesses.

Today’s announcement specifically identifies estate agents, letting agents and property management agents. It does not set out any additional regulatory requirements for mortgage advisers, which are already subject to Financial Conduct Authority regulation when carrying out regulated mortgage activities.

Nor has the government yet detailed how the new property agent regime will operate where estate agency groups also provide, introduce or refer customers to mortgage and other financial services.

The detail will therefore determine whether the reforms create additional requirements at group or individual level for businesses operating across both regulated mortgage advice and property agency.

INDUSTRY BACKING

Nathan Emerson, CEO of Propertymark, said: “Propertymark has long campaigned for action in this area and welcomes the UK Government’s commitment to stronger regulation of property agents.

“Professional property agents are increasingly being undercut by unqualified and inexperienced operators who are not held to the same professional standards.

“This is unfair to responsible businesses that invest in qualifications, training and compliance, and leaves consumers exposed to poor practice without adequate protection.

“Building on the professional standards, structures and good practice already established across the sector will be critical to making this a success and ensuring the new regime is understood, enforced and adhered to consistently.

“Propertymark looks forward to working constructively with the UK Government to ensure regulation delivers higher standards, effective enforcement and a genuinely professional property sector.”

HOME BUYING REFORM

The Conveyancing Association said the move also needs to be viewed alongside wider government plans to reform the home buying and selling process.

Beth Rudolf, director of delivery at The Conveyancing Association, said: “The Conveyancing Association very much welcomes the Government’s commitment to regulating property agents.

“Estate agents are a key part of the home moving process but, unlike many of the other professionals involved, they have not previously been subject to the same form of professional regulation.

“That becomes even more important as the Government introduces its home buying and selling reforms and places greater focus on material information being provided upfront. We have been calling for regulation through our work with the All-Party Parliamentary Group for Commonhold and Leasehold Reform and Parliamentary Select Committees, and an independent regulator should also mean the cost of enforcement sits with regulated members rather than the public purse.

“It should help ensure agents are properly educated and qualified.”

“Crucially, it should help ensure agents are properly educated, qualified and kept up to date with the considerable amount of new legislation affecting the sector.

“We are also pleased to see the regulator’s role extending to the administrative costs and timescales for providing LPE1 and FME1 information, with the aim of ensuring this is supplied for a reasonable fee and within a reasonable period.

“Our own data shows it takes an average of 54 days from payment to obtain this information, which is clearly far too long when we are trying to create a quicker and more certain home moving process.

“We would like the same approach to cover the Commonhold Property Enquiries form, the CPE1, which we are currently working on with the wider industry working group.

“Effective regulation, combined with clear standards around material information and the information required to progress a transaction, can play a major part in making the Government’s wider reforms work in practice.”

DETAILS TO FOLLOW

The government said it was committed to bringing forward the changes as soon as possible and would provide further information in due course.

Alongside agent regulation, ministers will legislate for powers to cap permission and administration fees charged to leaseholders and homeowners on privately managed estates, with a public consultation determining which charges should be covered and the level of the caps.