COMMENT
It’s time to raise the bar, says David Dalby, Director of Residential, RICS. The Government must act to restore consumer confidence in residential sales and lettings.
B
uying, selling, letting and renting a home constitute some of the most stressful activities people undertake, and consumers
engaging with selling or letting agents place an enormous amount of trust in their agent to offer a professional and trustworthy service to them. The current regulatory and redress
regime for UK residential property is complex, inconsistent and fragmented. It is ineffective at preventing significant consumer detriment and confusing for businesses. As long as agents don’t have to legally
meet any minimum professional standards before they start trading, the consumer is at significant risk. This must not be allowed to continue. Self-regulation by the sector, properly developed, implemented and policed, provides the best and most effective means of ensuring consumer service and protection, without increasing the regulatory burden on business. RICS is calling on the Government to
endorse the introduction of a single regulation proposition for residential property aimed at preventing consumer harm and creating clarity for businesses. The proposition must have distinct elements – standards, enforcement, and redress. RICS, with its far-reaching experience
of principles-based regulation, is calling on the Government to endorse its work in driving the development of industry-wide standards which are recognised and understood by property professionals and consumers alike. RICS agents are part of an effective,
rigorous, and tried and tested regulatory regime based on the clearest standards of
40 MAY 2012 PROPERTYdrum ‘The regulatory
regime is complex, fragmented and inconsistent.’
service and proper technical knowledge. Most importantly RICS regulated agents are required to have in place appropriate safeguards with regard to clients’ money, professional indemnity insurance and consumer redress, and their compliance is subject to a robust checking regime. Many High Street estate and lettings
agents operating in the sector are not subject to the same high professional and ethical standards as RICS members. The range of sector licensing schemes, awareness groups, and ombudsmen presents a complicated picture to consumers who want and deserve more effective and transparent regulation. The Property Ombudsman’s annual
report notes a 26 per cent increase in complaints against lettings agents since 2010. As more than 25 per cent of these involve agents who were not registered under the voluntary system with TPO, the Ombudsman could do nothing. Simple steps can be taken which would
restore consumer confidence and generate a better understanding of what consumers should look for when choosing an agent.
An easy first step for the Government would be a simple amendment to the 1979 Estate Agents Act to redefine the definition of estate agents to include letting agents. This action is needed now as the lettings market is seeing a surge of activity. It is imperative that both landlords and tenants understand that, unless their letting agent is signed up to the RICS or other voluntary redress schemes, their only course of redress is via a potentially expensive court case. This needs to be followed up with action
from trading standards officers to prosecute those agents not complying with the law. Property sales and lettings are too important to be left to those unwilling to demonstrate high professional and ethical standards. As well as confusing consumers, the
prevailing system can confuse businesses. Successive Governments have danced around regulatory reform with piecemeal initiatives which have been of some benefit to the consumer, but have created a confusing system. Enough is enough. The Government
must no longer turn a blind eye to regulatory reform in the residential property sector. It must be removed from the ‘too difficult pile’ and dealt with immediately in order to create a level playing field within which all businesses can operate. The timing is right for RICS, in
conjunction with other reputable organisations within the sector, to lead a new agenda in setting professional standards for residential property.
Do you have any views to share?
www.propertydrum.com/articles/RICS1
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