Baroness Hayter of Kentish Town
Main Page: Baroness Hayter of Kentish Town (Labour - Life peer)Enterprise and Regulatory Reform Bill
Baroness Hayter of Kentish Town Excerpts“Letting agents etc.
(1) Section 1 of the Estate Agents Act 1979 (estate agency work) is amended as follows.
(2) In subsection (1) for the words “to which this Act applies” substitute “and in subsection (1A) below to which this Act applies.
(1A) This Act also applies, subject to subsections (2) to (4) below, to—
(a) things done by any person in the course of a business (including a business in which he is employed) pursuant to instructions received from another person (in this section referred to as “the client”) who wishes to let or have the letting of an interest in land managed (for example, the collection of rents on his behalf)—(i) for the purpose of, or with a view to, effecting the introduction to the client of a third person who wishes to let an interest in land; or(ii) after such introduction has been effected in the course of that business, for the purpose of securing the letting of the interest in land; or(iii) for the purpose of, or with a view to, managing the letting of the interest in land on behalf of the client; or(iv) for the purpose of, or with a view to, block management of interests in land; and(b) management activities undertaken by any person in the course of a business (including a business in which he is employed) in connection with land or interests in land.””
Baroness Hayter of Kentish Town
My Lords, this simple amendment in my name and that of the noble Baroness, Lady Howe, would make letting and block managing agents have to belong to a redress scheme. Estate agents must belong to a redress—that is, an ombudsman—scheme. That is good for users, having an independent arbitrator to sort out disputes. Also, if an estate agent repeatedly cheats consumers, or does so particularly badly, it can then be banned by the OFT. However, letting agents, which handle client money and have slightly younger, poorer and less confident users, are completely unregulated. This means that an estate agent banned by the OFT can reopen the next day as a letting agent. Neither the landlord nor a tenant can take a complaint about a letting agent to an ombudsman, unless that particular agent chooses to join.
There are 4.5 million people who rent privately, two-thirds through letting agents. Given that tenants move quite often, they resort to letting agents with some frequency. Half of them stay in their property for less than two years, as opposed to 6% of owner-occupiers. There are, I fear, a lot of bad—indeed, some very dubious —letting agents. Just today, we have had a major ASA ruling against a letting agent who was breaking the ASA code by not disclosing compulsory charges.
Viscount Younger of Leckie
My noble friend makes a very good point. I can reassure him that the Select Committee report is due out very soon. It is likely to be in May; it may even be as early as April. That is not a guarantee, but I hope that it gives a helpful indication as to what the timing might be.
None the less, I recognise that the issue of a lack of redress is a serious one, and I know that my honourable friend in the other place, the Housing Minister Mark Prisk, considers this a serious issue, too, and is giving it the most serious consideration. We will reflect very carefully on this and other recent debates, and I am sure that the Housing Minister will keep in touch with Peers who have spoken today.
I shall turn as fast as I can to Amendment 82. I thank the noble Lord, Lord Campbell-Savours, for having brought this issue to my attention and to that of the House. I have considered carefully the amendment and the arguments for introducing it. The Government are of course concerned to hear that buyers may be experiencing difficulties when trying to purchase a property at auction, especially if it involves first-time buyers. I am pleased to say that there is already legislation in place designed to address just this sort of unfair practice. Therefore, new legislation will not change the position regarding consumer protection in such matters. I will explain why.
Under the Consumer Protection from Unfair Trading Regulations 2008, auctioneers, like traders in all sectors of the economy, are required in their dealings with consumers to treat them fairly and not mislead them. Under the CPRs, there are also a number of business practices that are considered unfair in all circumstances and are prohibited. When marketing a property, it is prohibited to use bait tactics such as luring bidders to auctions using pricing techniques, which the noble Lord raised as an example. OFT guidance on the CPRs published last September, of which the industry should be fully aware, gives the specific example of guide prices not being distorted to attract potential buyers.
Where traders treat consumers unfairly, they may face criminal or civil enforcement action. Enforcement of the CPRs is by the OFT and local authority trading standards services. We are, of course, in the process of better equipping trading standards to take greater responsibility for consumer law enforcement, and will be transferring central government funding for national leadership and co-ordination of enforcement activity from the OFT to the National Trading Standards Board. In addition, the new Competition and Markets Authority will have consumer enforcement powers to address business practices that distort competition or impact on consumer choice in otherwise competitive markets.
Furthermore, I understand that the industry encourages fair practice in this area and offers guidance and training. For example, the Royal Institution of Chartered Surveyors provides best practice guidance for auctioneers selling real estate. Such guidance addresses price guides and states that these guides must not be misleading, advising that a price guide that is clearly below the figure that the seller will accept is misleading. As best practice it also says that auctioneers should clearly indicate in the catalogue that price guides may be subject to amendment during the period leading up to the day and time of the auction sale.
In the light of the consumer protection legislation already in place, and as we have not seen any evidence on which a change of legislation could be justified, we do not feel the necessity to change legislation in this area. The noble Lord may wish to write to the OFT, providing evidence of the experiences and findings in this matter that are causing him concern. I hope that he is reassured by my answer and that he will therefore not press his amendment. I note that this is a new issue that was not raised in Committee and I acknowledge his apology. However, I believe that he raised some interesting points that we will keep in our sights. I also ask the noble Baroness, Lady Hayter, to withdraw her amendment.
Baroness Hayter of Kentish Town
My Lords, this amendment simply asks that letting agents should have to sign up to a redress scheme. We have checked it with the lawyers, and it does not apply to development land or anything else. If that was the case, and if the noble Lord had said he that accepted the need for redress, that it was just the wording that needed changing and that it was coming back at Third Reading, I would be happy to withdraw. Sadly, that is not what the Government have said.
The unfair trading regulations do not work. You cannot go to trading standards; it does not give redress. The Government have given no answers other than self-regulation or, “Wait for another committee”. Consumers want this; Mark Prisk wanted this in 2007; Lib Dem policy is in favour; landlords and tenants want it; the OFT wants it; and so does the industry, despite the costs. I thank noble Lords who have all spoken in support—there has been nothing but support from all around this House. I believe that, in addition to that list, the House will support the amendment. I beg leave to test the opinion of the House.
Baroness Hayter of Kentish Town
My Lords, not surprisingly we support these amendments. I have been working with ARMA on trying to get some of this done. There will be a voluntary scheme, but only the good ones will join. The advantage of these amendments is that they will make sure that everyone, not only the good, will have to meet those standards.
Viscount Younger of Leckie
My Lords, I am grateful to my noble friend Lady Gardner for the thought and effort that she has put into the preparation of the five amendments we are now considering. Her ideas and broad experience of the housing sector are an invaluable resource to this House. Her amendments, like those of the noble Baroness, Lady Hayter, address the private rented and residential leasehold sectors. I will not repeat what I have already said about those areas.
I have carefully considered my noble friend’s Amendment 81B on the ability of freeholders to recover their legal costs from leaseholders and I take her concerns very seriously. This amendment aims to limit the circumstances in which costs of proceedings incurred by a landlord or other party with an interest in the property at a leasehold valuation tribunal could be charged back to leaseholders. I should point out that where a freeholder is able to recover costs in connection with proceedings from the leaseholders, this is contractual matter between them and will be set out in the lease. I am aware that leaseholders are increasingly concerned about the recovery of such costs as administration charges where the lease permits this and I understand that my honourable friend Mark Prisk is thinking about this issue. I am concerned that my noble friend’s amendment would not achieve her goals and would not in fact provide any greater protection for leaseholders than already exists.
I know that my noble friend, as she said, recently took part in a high-level round-table discussion on residential leasehold issues. I understand that a number of practical ideas for improving awareness of leaseholders’ rights emerged from that event and that the Department for Communities and Local Government is committed to working with the Ministry of Justice and others to take those ideas forward. The issue of recovery of legal costs as an administration charge, rather than a service charge, requires detailed consideration. For this reason, I believe that the current Bill is not the best place to consider this complex issue.