New proposals to crack down on unfair property agents

The government is planning to set up an independent regulatory body to oversee the work of letting and property management agents.

Ministers say the move is necessary to end abuses in the property management industry, drive down costs and protect consumers from the small minority of rogue agents.

Research by consumer group Which? shows that unfair practices can lead to as much as £700m of unnecessary service charges being paid each year, and others such as the All Party Parliamentary Group on leaseholds believe the total could be as much as £1.4 billion.

Anecdotal evidence of poor management includes:

• a group of leaseholders charged ten times the market rate to have a new fire escape fitted – with the £30,000 contract handed to the freeholder’s brother
• one landlord charged £500 by his agent for repairing a shower door
• a London-based property agent who tried to charge a leaseholder almost £5,000 to transfer ownership of a parking space to other leaseholders.

The government is now carrying out a public consultation on whether the law should be changed so that all letting and management agents, across both the private rented and leasehold sectors, must be qualified and regulated to practise.

Measures to be considered as part of the call for evidence include:

• whether leaseholder tenants should have a greater say over the appointment of managing agents
• how transparency can be increased in the system so that tenants and leaseholders know what they are being charged for and why
• ensuring fairness and openness around relations between freeholders and agents
• looking at what qualifications are needed by agents to practise and how regulation can be improved.

These proposals are part of wider government action to bring power back to the tenant and leaseholder.

It’s currently planning a ban on new build homes being sold as leasehold as well as restricting ground rents to as low as zero. It has also confirmed it will legislate to ban letting fees so that tenants aren’t hit by unfair charges.

Please contact Santokh Singh if you would like more information about the issues raised in this article or any aspect of commercial property law.