The Government has introduced a last minute amendment to the the Enterprise and Regulatory Reform Bill which will require managing agents in the residential leasehold sector to offer leaseholders and freeholders access to an approved ‘redress scheme’.   The amendment will also apply to letting and managing agents operating in the private rented sector.

Housing Minister, Mark Prisk MP, was pressured to make this move following a determined campaign in Parliament to introduce statutory regulation of managing agents.  That campaign has been spearheaded by Sir Peter Bottomley MP in the House of Commons, and Baroness Gardner and Baroness Hayter in the House of Lords.  Baroness Hayter had introduced a broader amendment which would have brought managing agents within the scope of the Estate Agents Act 1979, and given the Office of Fair Trading greater enforcement powers.

In explaining the Government’s thinking, Mark Prisk made clear that formal, statutory regulation of managing agents is not appealing because the Government:

1. Believes that the majority of managing agents offer a good service and operate within the law.
2. Wants voluntary regulation to grow.
3. Better use made of existing regulation.
4.  Wants to avoid the risk of duplicating existing protection.
5. Says such a move would otherwise increase the regulatory burden on managing agents, who will pass the costs onto leaseholders and this in turn will stifle innovation and competition in the sector.

The move has received broad approval from industry bodies.

ARMA’s chairman, Ben Jordan said: “ARMA members are already required to be members of an ombudsman scheme so anyone using an ARMA agent already has this level of protection. Extending this requirement to all managing agents is a welcome step in the right direction and certainly good news for the residential leasehold sector overall. Leaseholders who suffer poor service at the hands of their managing agent will be able to seek effective redress, whether or not the agent is a member of a professional body.

“However, greater protection is still needed in the sector which is why we’re introducing our own self-regulatory regime – ARMA-Q. Due to be launched in May, this will see our members bound by a Consumer Charter, measured against bespoke Standards and overseen by an independent regulatory panel”.

Meanwhile, Ian Fletcher, director of policy at the British Property Federation, said: “The Housing Minister has listened to the sector’s representations and reached the right conclusion. As is the case with regulation, government support and resource for its enforcement to ensure agents are not paying lip-service to it, will also be vital.”

The details of approved redress schemes and how the law will operate have not yet been decided and the Government intends to consult on this after the Regulatory Reform Bill becomes law.  The details will be introduced in the form of secondary legislation.

Readers who want to contribute their views are encouraged to write to their Member of Parliament.

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