Estate agents would have to go back to school and finish higher education under Labour plans to rid the housing market of cowboys.
Labour’s shadow housing minister Matthew Pennycook has tabled an amendment to incoming housing reforms which would require all estate agents to have at least one A-level and all directors of estate agencies to have an undergraduate degree.
If passed, the rules would need to be enacted within 24 months of the bill becoming law. Some 102 pages of amendments to the 133-page “Leasehold and Freehold Reform Bill” are currently being debated by MPs.
Estate agency trade body Propertymark has long been calling for “a properly regulated industry” where agents can be “trusted and respected” by consumers.
Similar rules are already in place in Scotland. Overseas, countries have even stricter requirements. In Sweden, for example, all estate agents have to have a two-year university qualification. But successive UK governments have resisted calls to regulate England’s agents in the same way.
In 2017, Sajid Javid – then Secretary of State at the Ministry of Housing, Communities and Local Government – committed to regulate letting agents. This led to Lord Best’s review in 2019.
It is the recommendations in this review which Mr Pennycook, MP for Greenwich and Woolwich, is now trying to set in motion through the leasehold bill.
He first mentioned Labour’s plans to introduce the recommendations at his party’s annual conference last year.
Policy head at Propertymark, Timothy Douglas, said the rules would apply retroactively. This means all current agents could be forced to return to education if they do not already have the minimum level of qualifications and would likely be given a grace period in which to comply with the new entry requirements.
Mr Douglas said in England, it will work a lot like the transition which saw financial advisers become more qualified back in 2012 under the Financial Conduct Authority’s Retail Distribution Review.
He added: “We want a properly regulated industry where our professional knowledge and skills are trusted and respected. We want to level the playing field for the consumer.
“There really is no oversight by anybody and that’s the fundamental issue. It’s just wrong.”
Lord Best’s review also called for a new regulator to oversee the sales and lettings industry. Currently, estate agents have to be signed up to a redress scheme which mediates complaints between tenants and landlords. If they do not sign up, they face a fine of up to £5,000. Some experts think the fine is too low to incentivise take-up, leading to some rogue landlords sidestepping the regulation.
Reward limits in the schemes are also relatively low. The Property Redress Scheme, for example, does pay out more than £25,000 and it rarely hits that ceiling.
A new regulator would be armed with a new statutory code of practice which would be used to adjudicate against agents and could lead to much larger fines.
In the meantime, National Trading Standards has tightened its guidance for estate agents.
Late last year, it told firms that more details need to be included in property listings and disclosed upfront at viewings in order to avoid buyers discovering “nasty surprises” which can collapse deal chains.
James Munro, of National Trading Standards, said his team will be monitoring property portals such as Right Move, Zoopla and On The Market over the next 12 months to see if the guidance is taken onboard.
