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Amendment, by leave, withdrawn.
Lord Truscott moved Amendments Nos. 75 to 87:
Clause 48, page 28, line 13, leave out “suppliers were to the regulated gas suppliers” and insert “providers were to the regulated gas providers”
On Question, amendments agreed to.
The Earl of Caithness moved Amendment No. 88:
(1) Section 22 of the Estate Agents Act 1979 (c. 38) (standards of competence) is amended as follows.
(1) The Secretary of State will by regulations made by statutory instrument designate any body of persons as an approved body which people engaged in estate agency work, including both the sale and lettings of residential property, must belong to.
(2) The approved bodies must make membership conditional on signing up to rules and codes of conduct, which will include—
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The noble Earl said: My Lords, this has been a very frustrating Bill to take part in. In Committee we were hopelessly confused by the groupings of amendments. I commend the Minister for what he has done to make the groupings much better on Report. Now that we are on Report, we have had our concentration broken by what I would consider an unnecessary intervention of a Statement when we were well over two-thirds of the way through the debate.
As usual, I must declare my interest as a consultant to an estate agency in London. I thank the Minister very much for the letters that he has written to me and for our meeting. I am extremely grateful to him; he could not have done more to at least listen to what I had to say, although whether it moved him at all is doubtful.
Amendment No. 88 is a revised version of the one that I tabled in Committee. In Committee a number of arguments were made against my proposals, and I should like to put the counterarguments on the record. The first was that the standards and qualifications that I wanted would inhibit competition in the industry. I believe that the reverse is true; most honest agents want some form of qualifications and are happy to obtain them. Only very recently a record number of 1,200 people sat the various examinations that the National Association of Estate Agents sets. It is interesting to know that the average age of the members of that association has fallen to only 35. I believe that the minimum competency standards should be a basic knowledge of the law, building constructions techniques and valuation techniques. The minimum competency standards set by the NAEA, which are the same as the three points that I have just mentioned, equate to an NVQ level 3.
Another argument raised against the measure was that the problem is not incompetence but one of malpractice and lack of integrity. We all support the idea of a redress scheme but it is equally important that provisions are made for structures to be placed up front. While malpractice and lack of integrity are a problem, they are often encouraged by a combination of not having to abide by rules and codes and from a lack of adequate understanding. Exactly the same arguments can be applied to all the other professions involved in the buying and selling procedure that have to have licensing and regulation; for example, conveyancers, solicitors, surveyors and financial advisers. The Government’s position that you can regulate most of the groups dealing with buying and selling but shy off when it comes to estate agents is totally illogical.
It was argued that my concerns would be dealt with by the negative licensing powers of the Office of Fair Trading. Again this comes back to the issue that a redress scheme will punish only those who have committed a crime; it will not prevent the crime. I welcome the Government’s actions on implementing a redress scheme but I believe that it should be up front and that positive licensing is the easiest and most effective method to check malpractice within the estate agency profession.
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The noble Lord, Lord Borrie, said that, as usual, all I really wanted was an expensive closed shop. I counter that by repeating the point that all the other professional bodies involved in buying and selling are effectively closed shops as a result of government action. Thousands of consumers are being ripped off every year because a small number of estate agents are not qualified and are acting as cowboys in what should be a sensible profession.
It is not the case that industry bodies are keen to control the industry themselves. Under my proposals the Secretary of State would agree what the approved body would do or require. I should like to see an approved body that would ensure minimum competency standards and indemnity insurance and client protection insurance as required. I related to the Minister the insurance that I have to carry in order to retain my membership of the Royal Institution of Chartered Surveyors.
Membership of a redress scheme is covered by the Bill. There should be a commitment to a minimum number of hours of continued professional development. That happens in most industries and it is only logical that it should be extended to estate agents.
Consumers will be confused as in due course some estate agents will be regulated and licensed under the alternative business structures in the Legal Services Bill. A large number of the bigger estate agents want to go into partnership with lawyers and produce a one-stop shop, and they will be regulated when they do so. So we will have a dual market—some will be regulated but others will not.
I think that the real reason the Government are refusing to act is because of what is happening in Europe. As most of your Lordships will know, the EU is looking at the whole question of standards in estate agency. Could the Minister confirm that the final draft of the proposed standards which is being drawn up is likely to be agreed in Rome in March, that there will then be a further 12 months for discussion and that the final standards will be published in March next year?
Could the Minister also confirm that Brussels recently informed the Confédération Européenne de l’Immobilier that if countries do not take up the standards voluntarily, it will look to bring them in by directive in 2011-12? As those standards are very similar to those of the National Association of Estate Agents, I take the rather cynical view that the Government are saying, “No, we are not going to do it now because we can blame it all on Brussels in four years’ time when it will be imposed on us”. That is not a sensible way in which to legislate. There has been British representation in all this through the British Standards Institute. The measure has been supported by the Government, and now the Government fail to take the initiative. That is a very good reason for moving this amendment. I beg to move.
Lord Lee of Trafford: My Lords, I repeat the declarations of interest that I made in Committee. I am a director of a large private property investment and development group, Emerson Development
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These Benches offer broad support to the noble Earl, Lord Caithness, in his Amendment No. 88. I pay tribute to what he has tried to achieve in protecting the public both in this Bill and previously. He brings his years of professional experience to this subject.
I do not wish to repeat the arguments that we made in Committee; essentially, we seek to expand the scope of the Bill to include both property lettings and direct sales from builders/developers to the public. On lettings, many tenants, particularly of cheaper properties, are by definition far less likely to be able to afford to employ qualified advisers when contemplating a tenancy. Our contention is that they need protecting from unscrupulous agents. In addition, in recent years there have been a substantial number of purpose-built flat developments for letting, particularly in our major cities. Buy-to-let investors, often with limited property experience, have bought blocks of individual flats hoping to benefit from their capital appreciation rather than developing a genuine, long-term landlord/tenant relationship. Should the property market turn down and/or interest rates rise, as they have done recently, those investors may well have to dump the properties on the market, cutting their losses and perhaps allowing an unscrupulous landlord/investor to come in. As agents of mixed qualifications and integrity are likely to be involved at a number of stages, we believe that tenants should have a right of redress. I am particularly pleased that the National Association of Estate Agents supports bringing residential lettings into this legislation.
On sales, the approach by the noble Earl effectively enables the activities of builders/developers selling directly to the public to be classified as estate agency work and therefore subject to the redress scheme. Although the majority of such developers are usually covered by HBF or NHBC charter, we still feel that a redress scheme would provide additional protection for the public.
Lord Dubs: My Lords, I support the amendment although I shall reserve my comments about lettings until we reach the next amendment. I declare an interest in that I am in the process of trying to sell a property and buy one, so I have direct experience of a number of estate agents. But perhaps those anecdotes should be recounted in the bar rather than in the House.
My noble friend the Minister is very lucky that the NAEA seeks to raise standards through qualifications not in order to impose a closed shop but simply to improve the reputation and standing of the industry so that people like me can be provided with a better service when buying or selling a property. I should say that I am getting a good service; I do not want to cause myself more difficulties. It seems to me that the NAEA has made a sensible suggestion. I understand that since the launch of the scheme some 2,500 people
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7 pm
Lord Truscott: My Lords, Amendment No. 88, tabled by the noble Earl, Lord Caithness, introduces minimum standards of competence for estate agents. I am grateful to the noble Earl for his explanation of his intent behind the amendment. As he mentioned, we discussed this before. The amended Section 22 would require the Secretary of State to designate certain approved bodies that estate agents must belong to. Membership of those bodies would be conditional on agents signing up to the rules and code of conduct of the body concerned, which must include certain competency standards and requirements.
I appreciate the points made by the noble Lords, Lord Lee of Trafford and Lord Dubs, but as I have explained before, positive licensing was looked at in detail by the OFT, which concluded that its benefits are not justified by its costs. The Government share this view. Giving trading and professional bodies control of access to the market could reduce competition and result in rising prices, to the detriment of consumers. There is little evidence that such controls would prevent rogue agents entering the market or remove those agents whose misconduct is predominantly the result of a lack of integrity, rather than a lack of qualifications.
However, the Government support moves to develop national quality standards for residential estate agents in the UK. We see merit in that as, properly done, it can provide an incentive to raise standards. But this is a matter primarily for the industry. We do not support the imposition of compulsory qualifications and standards, which would amount to positive licensing. I recognise that the noble Earl feels passionately about this issue, which he has raised on a number of occasions over many years. I reassert the Government’s intention, which is to improve the current negative licensing regime. The fact that we are setting up redress schemes has been widely welcomed. Requiring agents to join approved redress schemes and making it easier for enforcers to prove misconduct and take enforcement action is the most effective way of tackling problems in the industry without driving up costs for consumers.
The noble Earl mentioned the European issue. At the moment, no decision has yet been taken on whether an EU directive is needed in this area.
The Earl of Caithness: My Lords, I am very grateful for the support of the noble Lords, Lord Lee of Trafford and Lord Dubs. There are many on the government Benches who dislike the view that the Minister is taking. He has to take his brief, and that is right; but the noble Lord, Lord Dubs, has put his
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The Minister said that it is not justified by the cost. I take issue with him on that. Is he prepared to let thousands of consumers be ripped off for a licensing scheme that will not cost the consumer any money at all? There are lots of estate agents out there and there is a big market working. All we are saying is that there should be some form of licensing to raise standards, as the noble Lord, Lord Dubs, said.
I was very disappointed not to receive any support from my Front Bench. That is in marked contrast to what happened in the previous Parliament, when I received very enthusiastic support from my Front Bench. Quite rightly, I have not asked my noble friend Lady Wilcox what she thinks about it; she has a job to do. But since she has been such a doughty supporter of the consumer in the past, it must gall her that the consumer is not about to be given the protection that he, and she, so badly want.
On the European issue, I know that no decision has been taken on a directive; that was not the question I asked. I asked the Minister two other questions, which he has not been able to answer. I did not give him notice of what I was going to ask him, but it is right that he ought to be able to reply and give me a chance to consider his thoughts. For the time being, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Caithness moved Amendment No. 89:
(2) In subsection (1) after “land” insert “or who wishes to let, rent or manage residential property”.
(3) In subsection (1)(a) after “such an interest” insert “or manage, rent or, as the case may be, let such a residential interest”.
(4) In subsection (1)(b) after “of that interest” insert “or the management, letting or, as the case may be, renting of that residential interest”.”
The noble Earl said: My Lords, I degrouped this amendment from the previous one, because it makes a different point. The noble Lord, Lord Lee of Trafford, mentioned it briefly and covered it well. I have two points to make in support of the amendment, which is to do with letting agents.
This is an area of the market that has grown hugely since the passing of the Estate Agents Act 1979. There are now a vast number of people working in the residential letting market who are not covered and who need to be covered. This is where the 1979 Act needs to be brought up to date. In Committee, the Minister mentioned the tenancy deposit scheme, and
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Lord Best: My Lords, I support the amendment. I declare a recent interest, in that I have been asked to become a member of the council of the Ombudsman for Estate Agents, and I have accepted that invitation, although I have not yet taken up any duties.
I feel sure everyone would agree that if we are regulating or providing redress in relation to estate agents, letting agents working out of the same establishments should have the same cover. The new proliferation of unregulated lettings agents is a strange phenomenon which, sooner or later, is certainly going to require some regulation. This must be the moment at which it would be easiest to incorporate that into legislation. As the noble Lord, Lord Lee of Trafford, made so clear, the buy-to-let market has increased private lettings from 9 per cent of the total stock in the UK to 12 per cent since 1979, when this early definition of what an estate agent did was set out in the Estate Agents Act 1979. Things have changed completely over the past 30 years, and frankly it is simply a mistake to omit the managing and letting of properties rather than the sales thereof.
I was proud to play some small part in bringing the tenancy deposit protection scheme, as it is now known, into being. As the noble Earl, Lord Caithness, said, it covers only tenancy deposits, which is a relatively small part of the total workload of those who are handling lettings. It certainly does not go nearly far enough to embrace what is needed in terms of regulation of new letting agencies. I am told by the Brent private tenants’ association that there are now, in the mushrooming of these new lettings agencies, four lettings agents within 50 yards in Wembley, all operating in competition having been set up virtually overnight to take account of the growth in the market of private lettings. Surely it is relatively easy to correct in this new measure what is, in effect, the mistaken description of estate agency that dates back to 1979. I strongly support the noble Earl in his amendment.
Lord Dubs: My Lords, I support the amendment. It is my understanding that there are far more queries and complaints about lettings through estate agents than there are about sales. One has only to talk to people or to read the newspapers to realise that people are greatly concerned that they have been dealt with badly when they have let properties and they are unhappy about that.
We all congratulated the Government on the Bill, despite our reservations about details—and I introduced a Private Member’s Bill in the previous Session. That also did not concern lettings, but that was an oversight on my part and there were some drafting difficulties. I understand from my noble
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