Communities and Local Government CommitteeFurther supplementary written evidence submitted by the Association of Residential Letting Agents

I would thank you for your letter of 17 April addressed to my colleague Mark Hayward, who deputised for me at the oral session earlier this year. We welcome the opportunity to respond to the two issues raised in your letter.

1) Points to be considered in advance of secondary legislation under the Enterprise and Regulatory Reform Act 2013

We are concerned that his has not been recognised as consumer legislation as it leaves open the possibility of one business being regulated by two different Consumer Redress Schemes. Many estate agents offer Residential Lettings. They already belong to a redress scheme for their sales activities and we cannot risk the consumer being confused by there being a different scheme for their lettings activities out of the same office.

The Act does not address the major problem of clients’ monies being misappropriated which rightfully belong to the landlord or the tenant. Whilst a tenant has some protection under the scheme introduced in 2007 as part of the 2004 Housing Act the landlords have no statutory protection.

ARLA is further concerned that it has not been recognised, as the Welsh Assembly is proposing, that a minimum educational standard is required. There are many pieces of legislation that an agent requires to have knowledge of, but at present anyone can start trading tomorrow, putting at risk a significant asset of their client landlord or the health and safety of the tenant. The Welsh Assembly Government recognises that this should across the board for staff employed in the industry and at different, levels dependant on the level of responsibility of the individual. The new Act does not see the individual as important and merely places responsibility on the business to belong to a redress scheme.

Finally we feel that this was an opportunity to provide industry specific legislation around the issues intended to be covered by the Consumer Protection from Unfair Trading Regulations 2008. These Regulations are causing issues around an existing industry code, approved by the OFT, which the new Act also indicated will be required. We have to question why the wheel is being reinvented and how long the consumer will have to wait to get a clear, simple and transparent lead from Government. Something which Government expects the industry to provide.

2) How the Estate Agents Act 1979 and the Consumer Estate Agents Redress Act 2007 has raised standards

There are several benefits for the consumer as a result of these pieces of legislation. These include but are not exclusive to, a requirement to make a client aware of any interest of the agent in the transaction, it allows the agent to be banned from practising, (but does not currently not stop them from carrying on as a letting agent), and vastly improved the transparency and quality of the property details provided to an interested party. This is achieved through the liking with the soon to be repealed Property Misdescriptions Act. Whilst it is felt by the Government that the Consumer Protection from Unfair Trading Regulations 2008 provide this protection these have already started to cause confusion in the sector.

The threat of being able to be banned and the knowledge that agents have been banned has acted as a deterrent and standards have generally risen and whilst the Ombudsman Scheme gets several thousand complaints in a year the consumer does have somewhere to go without going to court and many awards are made against the agents in favour of the complainant. However it has to be recognised that agents do not which to require to deal with a formal complaint and therefore take greater care to explain matters and also the obligation on all parties. This is an area which will greatly benefit the private rented sector which is a far more complex and ongoing transaction, but where it is likely to struggle due to lack of educational requirements.

May 2013

Prepared 16th July 2013