My Lords, I wish to focus my remarks on the R-word—redress—rather more than on the regulation side. Here before us, in the excellent amendment of the noble Baroness, Lady Hayter, is an opportunity to do something simple but clearly important which should have been done years ago—that is, to close the redress loophole in property lettings and management. The more one reads and
learns about this issue, the more surprised one is about how we got into this muddled position that we are in today, with one department—BIS—taking a different view from another—Communities and Local Government.
As we have heard, change will be achieved by bringing letting agents and those who manage leasehold property within the redress net of the Consumers, Estate Agents and Redress Act 2007 and the main provisions of the Estate Agents Act 1979. Those Acts are both BIS Acts but, of course, housing is a CLG responsibility. The key thing that they do is, first, require all sales agents to be a member of an approved redress scheme and, secondly, give the OFT negative licensing powers to ban or reprimand sales agents for any misdeeds. However, neither Act has any sway over letting or managing agents, despite them interacting with consumers to an even greater extent.
I do not think that we should see access to redress as regulation. It is a consumer right and one of the eight consumer principles. It is true that consumers who are unhappy with their lettings or managing agent could go to court to get access to redress. However, as we know, very few do. These amendments are about mandating an alternative to court—alternative dispute resolution—which means that letting and managing agents must offer independent ADR to tenants, landlords and leaseholders. Therefore, I strongly support the intent behind these proposed new clauses. From the consumer perspective, they would mean that consumers with a complaint, after exhausting any in-house complaints procedure, if there is one, can take that complaint to an independent body approved by the OFT or its successor. This ADR will most likely be an existing body such as the Property Ombudsman, which already covers most sales agents, although I believe that there are other schemes as well.
What is the impact of this loophole? Surely it does not make any sense that a consumer who has a problem with a sales agent when selling, or even buying, a house has access to an independent complaints body, but if that same consumer—landlord or tenant—has a complaint about a lettings agent over a rental property or a problem with a managing agent who looks after their block of flats, they may not have access to independent ADR. While it is true that many, possibly a majority, of lettings managing agents are voluntary members of the Property Ombudsman—we have heard that already from the noble Baroness, Lady Hayter—there are around 6,000 firms of lettings agents that are not subject to it.
Why does it matter that we target them? One only has to read the briefing from Which?, along with that from many other organisations which have already been mentioned, to find the answer. The sector’s problems as outlined by the noble Baroness, Lady Hayter, and other speakers—and I am sure many others will continue in this vein—speak volumes. I shall not extend my time by reading out the Which? report giving various examples of landlords and tenants who have suffered in this way. Noble Lords will no doubt have a copy and can see for themselves.
I very much hope the Minister and the coalition Government will be able to accept the very reasonable and carefully defined amendment moved by the noble Baroness, Lady Hayter, not least in view of what a Minister in his role—Mark Prisk, now the Housing Minister—tried to do on a previous occasion.