Housing Minister Explains Last Minute Government Amendment

While in opposition, housing minister Mark Prisk was a supporter of the full regulation of letting agents, but put forward a government amendment last week that deflected a proposal that would have achieved just that, saying that dragging the lettings industry under the umbrella of the Estate Agents Act would cause more problems than it would solve.

In a blog post, he explained why he believes that full regulation is not the ideal solution. He said, “Our plans overturned an amendment to the Enterprise and Regulatory Reform Bill which would have made letting and managing agents subject to the Estate Agents Act 1979.

We believe that this proposal for full regulation, by Baroness Hayter, was unclear and would have created an imprecise and clumsy tool that created problems rather than solving them.

Tenants and landlords would not have a straightforward route to address poor service, and it would impose a significant regulatory burden that would be passed across to tenants and leaseholders, and reduce innovation and competition within the industry.

With around 60% of all letting agents already belonging to a redress scheme, our proposals should be a simple requirement for the industry to meet.”

He goes on to argue that the current laws in place for protecting tenants are effective, and that the new plans will strengthen the already existing laws, adding further protection against rogue landlords and cowboy letting agents, without “strangling the private rented sector in red tape.”

But many in the industry do not feel that the government amendment has gone far enough. ARLA politely welcomed the changes, although the amendment ignored their persistent lobbying, and that of other industry bodies that have been calling for regulation. But Ian Potter, managing director of ARLA, has made it clear that they will not be appeased by this amendment. He said, “The Government’s amendment to the Enterprise and Regulatory Reform Bill marks a positive move for the private rented sector, and in particular for consumers, who only stand to benefit from a formal system of redress.

“However, it is vital that the Government begins the process of consultation quickly, taking on board the views of the sector, and moves to introduce secondary legislation as soon as possible.

“ARLA will continue to push for regulation of the private rented sector. This is a solid first step, but we must not lose momentum.”

A number of other prominent figures in the industry have spoken in much the same way, with little in the way of solid support. Although, there have been a few cheers from the sidelines. Lewis Shand Smith, chief ombudsman of Ombudsman Services, said, “Independent redress is a means of resolving complaints that is cheaper and quicker than the courts; it can help business to learn from their mistakes, and gives consumers confidence without imposing significant additional regulation on the sector.”

But regulation is not the only concern on the housing minister’s mind. In a speech at the Law Society, Mark Prisk lamented the imbalances and supply failures in the housing market, but was also positive about the growth of the private rented sector and the transformative power of the new build-to-rent industry. He said, “Put simply, we want a bigger and better private rented sector, a sector in which large scale and experienced institutional investors can help the market not simply grow, but also to mature.

“Small-scale individual landlords operate around the world, but in many countries, such as the US, Germany and Switzerland, institutional investment in the private rented sector is much stronger and more established than it is here. Evidence from those markets shows that where institutional investment is stronger, costs are driven down and the sector becomes more professional, with a longer-term perspective.

“That’s what we want to encourage here. It’s a change which has the potential to underpin sustained growth of the entire private rented sector, and offer beneficial changes to the market as a whole.”

Back to news