The Conveyancing Association (CA), the leading trade body for the conveyancing industry, has issued its response to the DCLG’s call for evidence on whether a new regulatory model is needed for agents in the leasehold sector.
The call for evidence has sought views on the regulation of letting and managing agents and the approaches the Government could take to implement any such regulation in order to best protect and empower tenants and leaseholders.
In its response, the CA highlights a number of current issues within the leasehold market that need to be addressed, including:
- The unreasonable fees charged by Lease Administrators.
- Duplication of charging.
- The ‘invention’ of additional services purely to generate extra revenue.
- Significant delays in the provision of services by the Lease Administrator.
To solve these problems, the CA has called for a number of solutions to be put into place such as:
- Legislation should be created requiring that reasonable fees are charged with a limit on the services so that new ones are not simply invented as is currently the case. A menu of charges should be set by the Secretary of State and reviewed biennially in line with the RPI.
- Administrative services should be delivered within five working days of receipt of payment or the fee should be refunded.
- Any Lease Administrator charging another party to provide services should be required to be registered with a fit for purpose redress scheme and the schemes should include the provision of services in both letting and property management, and should be funded by a per complaint payment – whether or not the complaint is upheld.
As part of its response the Association has also called for more resources for Trading Standards Offices in order to take enforce the current regulation effectively and to take action against rogue landlords and agents. It also wants to see a licensing scheme for all managing agents put into place in order to ensure they act professionally and efficiently.
The CA believes any Lease Administrator that is undertaking charged-for services, or has access to client money or property, should be regulated. It believes this must include Management Companies as well as Property Managers, Landlords, Freeholders, Estate Rent Charge Owners, Right to Manage Management Companies, Tenant Associations and Commonhold Associations given that reserve funds within these schemes can grow to many thousands of pounds and need to be protected.
It also wants to see the introduction of a fit and proper person test and qualifications/training depending upon the role undertaken. Anyone with access to client money should be aware of the rules and protection of client funds, and anyone with access to client property should be CRB-checked and aware of the relevant liabilities and obligations of a party to a Lease or Tenancy Agreement. The CA also argues that professional indemnity insurance should be a requirement.
The CA will be discussing this, and many other market issues, at its Annual Conference & Dinner which will take place on the 7th December at Stamford Bridge, London. Full details here: www.conveyancingassociation.org.uk/annual-conference/
Beth Rudolf, Director of Delivery at the Conveyancing Association, commented:
“This area has been a major concern for the CA for some time and our response seeks to ensure that the growing costs and delays that are a seemingly ‘natural’ part of dealing with certain Lease Administrators are no longer deemed acceptable. We have always encouraged our members to educate Lease Administrators using template letters explaining the legal obligations and case law around unreasonable fees but our data shows that the situation has in fact got worse. Regulation seems to be the only way of achieving solid consumer protection in a scenario where the payer of the service is not the contracting party for the service. The fact that the industry, including the managing agents, have been calling for regulation themselves is compelling and we believe now is certainly the time for action to be taken.
“Our response not only highlights the issues that cause problems, but provide a range of deliverable solutions that will give far greater protections to consumers. Creating solid, legislative consumer protection means introducing, for example, a tariff of lease administration fees – we believe this would immediately reduce complaints and problems, and would actually provide fairness to Lease Administrators themselves. They are often working under the terms of ancient leases and this would provide a fair and modern fee for the services they provide. Alongside this, we will need to provide a full remit to the Courts/tribunals to hear cases in relation to all lease administration fees along with Alternative Dispute Resolution (ADR) requirements.
“Leasehold has been one of, if not the, defining issue for the housing market in 2017 and this consultation provides us with the opportunity to change it for the better. There are a large number of vested interests in this sector who would very much like to maintain the status quo; it is therefore incumbent on everyone to back these proposals and to ensure that the Government is able to deliver real change in this area and create a positive experience for all stakeholders.”
To view the DCLG’s document, please visit: https://www.gov.uk/government/consultations/protecting-consumers-in-the-letting-and-managing-agent-market-call-for-evidence
The CA’s Strategic Plan, ‘Building the framework for the future’, can be viewed at: www.conveyancingassociation.org.uk/campaigns/modernising-the-home-moving-process-white-paper/
For further information on The Conveyancing Association including how to join, please visit: www.conveyancingassociation.org.uk