Enterprise and Regulatory Reform Bill

Baroness Howe of Idlicote Excerpts

Wednesday 16th January 2013 Grand Committee

I emphasise that I will come back with an amendment of my own about managing agents. The noble Baroness, Lady Oppenheim-Barnes, who attended the Committee until the very last minute of the session on Monday night but cannot be here today, feels very strongly about the managing agent issue. She might speak on that point on a future occasion but I know that she supports the general principle of the measure and is very pleased that managing agents have been included in the definition. I strongly support the measure, not just on account of the redress scheme but because the definition has been widened to cover these most important issues.

[Baroness Howe of Idlicote]

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.

[Lord Deben]

My Lords, the longer one has been in this House—or, indeed, in the House of Commons—the more one believes that certain statements are made irrespective of the Government. Somehow or other Governments take on a particular view about certain things, and regulation is one of those things. It seems to me that Governments often take a very narrow view about regulation and seem to think that if they regulate at all, they will be accused of red tape, of stopping businesses and of every heinous offence. That is the reason why the previous Labour Government refused to do this and why the present Government have introduced this Bill without this clause.

I hope the Minister will take it from somebody who has been in elected and now non-elected public life for nearly 40 years that it is the duty of Ministers to stand up against that attitude, because here is an issue where everybody recognises that there is only one sensible answer. It is not sensible to have a situation in which those who sell houses have a code that is different from the code for those who rent houses, because those who buy or rent houses think that they are working in the same context. Indeed, as it becomes more natural to buy and to rent in equal terms—I do not mean in numbers, but that people make those decisions—we must help the consumer in a sensible way. The only sensible way is the way so eloquently put forward by the noble Baroness when she pointed out that this is not regulation but consumer rights. It is the possibility of a consumer having a perfectly reasonable way of ensuring that they get fair do’s when they go to court.

It is very important for us to press this. I am speaking because I am a strong deregulator. I do not believe in the degrees of bureaucracy that we have managed to land on business. In my own business, I am conscious that there is a whole series of rules and regulations that restrict the number of people you take on and certainly stop the expansion of British industry and a lot of things that can be done. This has nothing to do with that. The only people who can dislike this light regulation are those who have every intention of misbehaving. When one reads that list of people who are supporting this, it is very hard to think of any responsible, respectable body, apart from the Caged Birds Society, that is opposed to this proposal.

I say this to my noble friend. Whatever is in his speaking notes—and I have a horrible feeling that I could write those notes, because there is a kind of parallelism with what I myself was given in the past, and was often willing to ignore—I hope that he will say to himself, “Least said soonest mended if I can’t give way”. If he cannot give way, some anodyne references would enable him to go back and say to the powers that be, “This won’t go. This isn’t acceptable”.

We must find a way to ensure that rogue letting agents do not get away with it any more. There is no argument that can be put up by BIS that can overcome the simple matter of the rights of the consumer. That is probably the elegant way through and I hope that he will be able to take it.