My Lords, I too congratulate the noble Baroness, Lady Hayter, on her determination to pursue these important changes and am delighted to have added my name to the amendment.
The proposals provide for basic consumer protection measures for the lettings market, already governing estate agents. These days, many property businesses
operate both as estate agents and letting agents. The divide between the two is, in many ways, artificial. We have, at present, the ludicrous situation whereby a member of the public who walks through the door of such a business wishing to buy a house will have access to accountability if they suffer poor practice. However, if they rent a house from the same business they will not. There is access to independent redress and client money protection for those buying a house but not for those renting one. This is quite illogical and is untenable at a time when more and more young families with children are renting privately, most of them through a letting agent. We cannot have letting agents leaving boilers unfixed, properties in a state of disrepair or running off with people’s money and facing no repercussions. When people do not get the service they pay for there should be consequences for the businesses involved. That is a simple consumer right. This is not an issue of party politics but of basic common sense, which is why this amendment enjoys cross-party support, as was clear in Grand Committee.
Letting agents themselves are asking Government for the measures that this amendment provides for. They know that much of the estimated 40% of the market that operates outside existing voluntary registration schemes is damaging the reputation of the entire profession. A survey by Shelter showed that only 20% of renters trust their letting agent, with 84% disagreeing that letting agents work in the interests of their tenants. It is vital for everybody—tenants, letting agents and landlords alike—that standards are raised. I have yet to hear a convincing argument against these proposals. The Government have claimed that requiring letting agents to meet certain professional standards will push up costs. However, research by the Royal Institution of Chartered Surveyors shows that this is not true. While there is a one-off cost, that figure is quickly recouped and there is a net benefit to the economy from these changes of £21 million over 10 years.
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It is also argued that existing regulations provide for redress in the event of poor practice. As far as I can see, that is also not the case. Existing regulations can stop only malpractice. CPRs do not empower consumers or provide them with a route to redress. In addition, a lack of trading standards resources means that these regulations are inconsistently applied, if they are at all. Only a tiny number of prosecutions have been taken against letting agents using existing CPRs. This is despite a significant upsurge of dissatisfaction with poor practice in the lettings industry. Complaints to the Property Ombudsman have increased by 123% over the past five years. Therefore, existing legislation is simply not fit for purpose.
As to the argument that these proposals amount to extra red tape, this is not red tape. Businesses do not like red tape and businesses are asking for these changes. This is simpler regulation; it is not more regulation. It has not strangled estate agents and it will not strangle letting agents. It is worth noting that landlords complain as much as tenants when the agent belongs to the ombudsman scheme. Landlords would be greatly helped by this measure.
In the mean time, consumers want change. As polling for RICS and Shelter show, the vast majority of those renting want basic standards to which letting agents should adhere and the right to appeal to an independent complaints scheme in the event of poor practice. Who can blame them? There is simply no good reason to deny them that. These changes are not a panacea for all the problems in the letting agents’ profession but they are a vital first step towards a market which works fairly. This amendment closes a loophole that should, in truth, have been closed quite some time ago. Doing so has long enjoyed wide support, including at one time from the current Housing Minister when he was in opposition. Back then, Labour Ministers opposed it and the noble Baroness, Lady Hayter, eloquently expressed her frustration with that in Grand Committee.
We now have Conservative Ministers, but the continued growth of the private rented sector means that this issue will not go away. It will only increase in importance and urgency. Almost everyone knows that this is the right thing to do but no Government have got around to implementing it. It is high time for this Government to break that cycle, prove that they are not bound to repeat the mistakes of their predecessors and give those who rent their homes the basic consumer protection that they deserve.