Market Update – changes ahead

Posted on Thursday, July 25, 2019

Recent days have seen a new Prime Minister installed in number ten and we all wait to see what new ideas and directions will emerge on resolving Brexit and on the domestic front with public spending, taxation and housing all under the spotlight.

With the glare of the media spotlight firmly on Westminster it may have gone unnoticed but there has been a significant announcement that will affect the future of residential property in the UK.

If we go back to 1979, the Estate Agents Act was introduced but one key section was excluded from implementation. Section 22 set out that minimum standards of competency would be required by all those operating in the sector.

Successive Governments in the intervening forty years have never seen fit to implement this section, preferring competition within the market rather than raising standards due to concerns over increasing the barriers to entry together with excessive regulatory burdens.

In 1979 the private rental sector did not exist as it does now and letting agents were therefore not defined under the legislation and are therefore not included. This currently means that an estate agent could commit a heinous crime in the morning, be banned from ever being an estate agent again at lunchtime and yet open as a letting agent in the afternoon! Clearly a nonsense!

However, July saw the results of a working group (ROPA – Report on Property Agents) announced by Lord Best. The conclusion was that the property industry needed to raise standards and the recommendation, subsequently accepted in outline by the Government, calls for all those operating in the sector to be professionally qualified (differing levels dependent upon role), for a new industry regulator to be created and for licensing of individuals and firms.

In principle this is a positive move.

There is a massive amount of work needed to agree the appropriate educational and knowledge standards and then organise for everyone to undertake the learning and qualification. A new regulator regime needs to be created and a licensing structure. Many of our team have already achieved professional qualifications via RICS, NAEA, ARLA and NALS and we will continue to encourage this even before it becomes mandatory.

The benefits to consumers will ultimately come from standards increasing and this will only happen if the policing and enforcement is robust. Basically, this will mean if licences to operate are taken away from those who fall foul of requirements. We already have many and various regulations but the subsequent inconsistent policing and enforcement currently sees too many “getting away” with poor service, poor compliance and, in some cases, fraudulent or dishonest practice.

A higher quality, more tightly regulated and licensed sector would, in my opinion, be a good thing. It will undoubtedly see less operators within it but levels of service, quality, integrity, transparency and compliance will be raised. Consumers will still have choice but the safety net of knowing that the minimum standards of knowledge and competency will be much higher than now.

Yours

Darren Murphy and Chris Harper

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