Agent regulation in the UK
Although proposals were announced by the Government back in April, letting agent regulation has still not been introduced in England. As it stands, while agents have to be registered with a redress scheme and protect all deposits they hold, there’s no requirement for them to undergo mandatory training or work to a specific code of practice. The three key things the Government has proposed introducing are:
• A mandatory code of practice, with an independent regulator
• A nationally-recognised professional qualification
• Client Money Protection.
With only around 60% of agents in England currently voluntarily signed up to one of the biggest self-regulation schemes which require CMP: ARLA, this potentially leaves up to 40% whose landlords are exposed to losing out financially if the agent goes bust or misappropriates monies.
However, with agents in Wales already licensed and the deadline for Scottish agents to be registered rapidly approaching, it may not be too long before every agent in England is also regulated, raising standards and reassuring landlords and tenants their agent is operating to professional industry standards.
In Scotland, a new Letting Agent Code of Practice came into force on 31st January this year. Agents must have applied to join the Register of Letting Agents by 1st October, after which it will be a criminal offence for them to conduct letting agency work if they’re not on the register. The legislation has been introduced to increase professionalism in the sector and make sure agents handle landlord and tenant monies properly. The penalties for breaking the rules are a fine of up to £50,000 and up to 6 months in prison.
Certain key people within the agency must have achieved a minimum standard of training and the Code of Practice means agents must hold Professional Indemnity insurance and have Client Money Protection (CMP) insurance.
The other real benefit to landlords and tenants is that agents in Scotland can now be held to proper account for the way they conduct business. If you think your agent has failed to comply with the Code:
1. Write to your agent with your complaint and give them a reasonable time to respond.
2. Apply to the First-tier Tribunal for Scotland (Housing & Property Chamber), which will then issue an enforcement order, setting out the steps the letting agent has to take to rectify the problem.
3. If the agent doesn’t follow the instructions on the order, they can be prosecuted and damages may be awarded.
Since November 2015, all letting and managing agents in Wales have had to be suitably trained and licensed. And, as a minimum, they must have:
• Professional Indemnity insurance
• Membership of a consumer redress scheme
• Client Money Protection insurance
Those agents who have already demonstrated a commitment to best practice by being members of ARLA, RICS, NALS or UKALA, get a discount on their licence fee.
Several agents in Wales have already been prosecuted, including:
• The first agent in Wales to be prosecuted, Yvette Phillips, who appeared at Cardiff Magistrates Court in November 2017 charged with operating as both an unlicensed agent and an unregistered landlord and then failing to comply with a fixed-penalty notice. She was fined £4,600 and ordered to pay costs of £671, plus a £170 victim surcharge.
• Louise Docwra, trading as North Wales Property in Bangor, who was fined £1,000 in December for trading without a licence and ordered to pay £300 costs plus a £50 victim surcharge.
If you are not sure if you’re existing agent is compliant with latest rules, do make sure you check and if they are not, ask the agent what they are going to do or consider moving agent prior to the changes.
Because we play by the book we want to tell you that…
Your home may be repossessed if you do not keep up repayments on your mortgage.
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The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.