ARLA has welcomed the recommendations contained in the Carsberg Review of Residential Property published in June and the inclusion of much of the Association’s pioneering work for the self-regulation of the Private Rented Sector. This includes training, qualifications and client money protection.

However, the Association is concerned that self-regulation, the proposals for the future of the rental market and urgently needed further investment through Buy to Let may be overshadowed by the public’s greater interest in the home sales process and pricing. To overcome this, it expects to be fully included in all industry discussions over the future of any form of regulation in the residential property market.

Compliance for member letting agents of ARLA has long included training and qualifications. From the outset, ARLA qualifications were welcomed by staff throughout the lettings industry as well as their client landlords and tenants. ARLA also requires agents to be members of the client’s money protection scheme for tenants’ deposits and landlords’ rents and transparency in terms and conditions. Many of these conditions of membership have been in place for nearly two decades.

“ARLA has trained over 10,000 qualified staff from among its member firms and it established the blueprint for standards in the lettings industry many years ago. Many of these initiatives have proved to be applicable throughout all areas of the residential housing market,” Ian Potter, ARLA’s Head of Operations pointed out. “It is gratifying that so many of our existing compliance requirements and standards and our more recent proposals to move forward with self-regulation are evident in the Carsberg Review.”

Currently, ARLA is calling for the licensing of all letting agents and for them to be members of independent redress schemes to protect the consumer. The Association has been vocal in its disappointment that compulsory independent redress for letting agents was not included in the legislation to enforce this for estate agents. It is generally expected that the Private Rented Sector will grow from some 12% of all housing to 15% over the next ten years. This will add an average 30,000 tenancies a year to the sector.

“The Private Rented Sector is growing and with the Carsberg Review also calling for independent redress and the licensing of all letting agents, hopefully Government will now act to help us with framework legislation. We need to be rid of the cowboy agents who will try to take advantage of this growth. Light touch regulation that includes these recommendations is the way forward.” commented Ian Potter.

ARLA co-sponsored the Carsberg Review with the NAEA and RICS.

Recommendations

1. I recommend that a regulatory body be established to administer a regulatory regime to require those offering agency services in the property sector to provide better information to consumers and to deal with other matters as set out.
   
2. The regulatory body should take active steps to ensure compliance though it should normally use a light touch approach.
3. I recommend that the powers to exclude people from operating as estate agents be transferred from OFT to the new regulatory body. This body could also exercise a graduated, proportionate approach to the application of lower levels of sanctions.
4. I recommend that landlords, letting and managing agents should be subject to appropriate regulatory requirements in order to achieve consumer protection, efficient markets and cost effectiveness.
5. I recommend that the regulatory body or bodies for letting agents and managing agents should introduce requirements for the protection of all client money held by those agents.
6. I recommend that estate agents, letting agents and managing agents and landlords who do not use agents should be required by legislation to join a private sector regulatory scheme. The regulatory bodies should be required to promote the interests of consumers as regards price, quality and variety of service and to promote effective competition. They should be required to put strong emphasis on information provision and to show that they have had regard for the cost effectiveness of their measures.
7. I recommend that existing bodies should be encouraged to develop regulatory schemes under a legislative framework and that OFT be given powers to approve such regulatory bodies. If legislation to require membership of a regulatory body is not quickly forthcoming, it would be beneficial for existing bodies to move ahead to establish a voluntary regulatory body and promote the benefits to consumers of dealing with agents who are members of that body.
8. I recommend that, on the establishment of a requirement for membership of regulatory bodies, the Government should undertake a review of all existing legislation affecting the residential property market with the objective of simplifying the statutory rules, eliminating those that can be left to a regulatory body and consolidating the remainder.
9. I recommend that all those who give substantive advice to residential property clients and customers be required to obtain a basic qualification demonstrating their knowledge of the law.
10. I recommend that the qualification for estate, block management and letting agents should be pitched at a basic level similar to that presently adopted by NAEA.
11. I recommend that a new qualification regime should include provisions for grandfathering existing experienced practitioners.
12. I recommend that the regulatory regime should incorporate general requirements for giving good information about property transactions.
13. I recommend that regulators should impose requirements to improve transparency in residential transactions, particularly to deal with actual or potential conflicts of interest.
14. I recommend that action should be taken by the appropriate authorities to ensure that lenders fairly describe fees for applications and for valuations.
15. I recommend that regulators should be required, when setting regulatory requirements, to be mindful of the need to ensure that customers are given clear information about pricing and the regulations should apply to all relevant business models, including those that use electronic information, to promote effective competition among firms using different models.
    
16. I welcome the expected requirement for estate agents to belong to a redress scheme and recommend that there should be a similar requirement for letting agents, managing agents and landlords who do not use an agent. Decisions about redress should be based on a code of practice, which should, in due course, be set down by an appropriate standards body and enforced by an appropriate regulatory body.
17. I recommend that government and industry should commit to working together to produce a single structure for all consumer property redress, with a single ombudsman for each line of business, which can be publicised effectively to all property consumers.
    
18. Except in relation to specific building contracts between a builder and a first owner, I recommend that developers and builders selling property directly to the public should be subject to a similar regulatory scheme to that applying to estate agents, tailored to the specific characteristics of the transactions concerned.
19. I recommend that the regulatory bodies give prominence, among their objectives, to requirements that agents should explain to their customers, and other parties to transactions, the various processes involved in transactions and the possibilities for improving the transaction to obtain certainty at the earliest possible time.
    
20. I recommend that the regulatory regime should require estate agents to give their clients information about the various processes they could adopt to expedite the achievement of a committed sale and that this should include the possibility of sale by auction.
    
21. I recommend that the regulatory regime should require estate agents to advise their clients on the various ways in which deposits may be used to increase the level of commitment at an early stage of the transaction.
22. I recommend that the regulatory regime should require estate agents to discuss with their clients ways in which the use of lock-out agreements, buyers’ declarations and sellers’ information packs can be used to expedite the transaction.
23. I recommend that the proposed regulatory body should consider recommending a standard draft contract to provide a basis for a specific draft contract to be provided by sellers to prospective buyers.
24. I recommend that the Land Registry should consider increasing the scope of the information it carries, so that it has a comprehensive store of generic information about leasehold blocks; and that the regulatory body should take action to improve the provision of other relevant information.
25. I recommend that legislation should be introduced to require the holders of search information to provide that information rapidly and efficiently to all members who wish to have it, at a reasonable price, with the objective of electronic availability online as soon as practicable. The legislation should ensure that information holders compete fairly with private search companies.
26. I recommend that the Government should amend legislation on Home Information Packs to make them voluntary.
27.  I recommend that it would not be helpful to introduce new measures through legislation or regulation to require the production of surveys, home condition reports or valuation reports at particular times. The best approach is to encourage the effective working of the market through helping the people involved in transactions to understand the various possibilities.
28. I recommend that the Government should undertake further work to enhance the effectiveness of measures to improve efficiency in the use of energy.
29. I recommend that the bodies established to regulate letting agents, managing agents and landlords who manage their own properties should be entrusted with the task of reviewing the provision of information to leaseholders and tenants with the objective of ensuring that the information is communicated clearly but that the required information is not excessive in volume.
30. I recommend that decision makers, legislators and regulators follow three basic principles when formulating proposals for the residential property field:

● Simple, transparent information for clients and customers is a primary objective;
● Proportionate control over the service provider rather than the service should encourage and allow innovation; and
● Consistent enforcement and redress should underpin all schemes.