Calls for a new regulator to “come down like a ton of bricks” on cowboy estate agents have been renewed by a lords committee.
Lord Best, who sits on the House of Lords Industry and Regulators Committee, told the Telegraph the Government “needs to show some teeth” after kicking regulation of estate agents down the road for years.
The social housing leader has written to levelling up secretary Michael Gove, citing the “overwhelming evidence of harm that some people experience” when dealing with letting agents. It is calling for a new regulator and a licensing scheme to stamp out “mis-selling” and “exorbitant charges”.
It follows reports that sellers are losing money because they are being deliberately put off high bids from buyers with independent mortgages.
Consumer body Trading Standards said sellers could be missing out on best offers because of commission deals.
Many estate agents receive referral fees by recommending mortgage brokers, solicitors, surveyors and other third party services.
But the boss of the enforcement authority said these fees can be so high that it becomes more lucrative to choose a buyer using these preferred services.
Property experts have also previously warned buyers about agents faking bids to drive prices up.
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In England, estate agents do not need any professional qualifications, licences or prior training. It is an outlier compared to neighbours such as Scotland, where agents have to be on a government register and undergo a “fit and proper person test”, and Wales – where they have to obtain a licence and complete a training course.
The committee first told the Government to fund a new regulator back in 2019, after former housing secretary Sajid Javid committed to regulating estate agents in 2017.
Lord Best said: “We want a comprehensive regulator of property agents. Everyone would feel a lot more secure and safe if agents adhered to a code of conduct with a regulator to back things up if things go wrong.
“A regulator would allow other agents who understand the law and can spot bad practice to inform their peers. It could go beyond compensation and put a firm out of business. It could come down on them like a ton of bricks.”
Currently, the Property Ombudsman and the Property Redress Scheme can offer consumers up to £25,000 in compensation if they fall victim to a rogue agent – but redress schemes have told the Telegraph that the full amount is rarely awarded.
Lord Best said this figure needs to at least be doubled, to reflect the harm caused if misinformation provided by an agent leads to a buyer ending up with a faulty, worthless home.
He added: “Regulation has been kicked down the road by the Government for five years. Now we need teeth.”
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The hope is that the Government will add a clause to either its Leasehold and Freehold Bill or its Renters Reform Bill – both of which are making their way through parliament.
This would then allow Mr Gove to dish out powers and insist that estate agents are better qualified. It would also cover managing agents who oversee much-debated service charges paid by flat owners who own leasehold properties.
Labour’s shadow housing minister Matthew Pennycook has already tabled an amendment to the Leasehold and Freehold Bill to do this.
Timothy Douglas, policy and campaigns head at estate agent trade body Propertymark, said mandatory qualifications, a statutory code of practice and regulatory oversight was “vital” in order for the industry to comply with incoming legislation.
A spokesperson for the Department for Levelling Up, Housing and Communities said it is “committed to promoting fairness and transparency for tenants and homeowners and making sure that consumers are protected from abuse and poor service”.
They added: “We continue to work with industry on improving best practice across the property agent sector, and measures in both those bills will help to drive up overall standards.”
