Strengthening leaseholder protections over fees, charges and services: consultation

4.5 Implementation and Enforcement

332. We have identified three options to implement and enforce the qualification requirements. These options rely on the existing institutional framework. As set out above, the UK government is considering the wider recommendations of Lord Best’s Report and should these be taken forward, we would revisit the models of implementation and enforcement proposed below in light of this.

Option 1: Implementation led by designated professional bodies, supported by local authority enforcement (preferred option)

333. There are professional bodies in the managing agent sector who play a vital role in driving professionalisation, ethics and standards across the sector. Utilising the depth of expertise of these bodies could deliver a regulatory regime to introduce qualifications quickly and effectively. This option could also have wider regulatory benefits through the systems and requirements that professional bodies place on their members.

334. We could therefore legislate to take advantage of the existing structures that professional bodies have in place. This could involve mandating that: (a) all managing agents must be members of a designated professional body, and (b) in order to be a member of a designated professional body, agents must hold, or be working towards, an appropriate professional qualification. This approach could also involve mandating that (c) firms employing managing agents must become a member of a designated professional body; and; (d) that firms have a statutory responsibility to ensure their employees working as managing agents are qualified or are working towards an appropriate professional qualification.

335. This approach would allow the designated bodies to regulate their members to ensure that they had attained qualifications appropriate to the work that they do. The designated bodies could require members to provide confirmation that they had undertaken qualifications upon registration. Our view is that this is the strongest available option to encourage a high rate of compliance with the requirement to undertake mandatory qualifications. As such, this is our preferred option.

336. Additionally, under this option, a requirement for agents to undertake an amount of CPD could be required. If this was taken forward, the designated bodies would work with their members to ensure that they had undertaken the required level of CPD.

337. Under this option we would create a list of approved designated bodies. Professional bodies like the Royal Institution of Chartered Surveyors (RICS) and The Property Institute (TPI) already run professional membership schemes and hold the relevant expertise to undertake this role. There may also be other existing bodies who wish to apply to be designated.

338. We would set out the requirements for an organisation to become an approved designated body which would include responsibility to ensure that its members hold the appropriate level of qualifications required for work which they do. We would also set out the expectations for designated professional bodies in the approach that they take to setting the course content requirements for the qualification, the approach that they take to the implementation of the requirements and sanctions where managing agents do not comply, as well as any other issues about the way that the designated bodies implement the requirements. We could remove the body from the approved list if they do not implement the requirements accordingly.

339. We would expect that managing agents and firms that did not uphold specific professional standards could be expelled from the designated body if they do not comply, which means that they could in effect be prevented from practising if they do not take steps to remedy breaches and rejoin a scheme within a reasonable timeframe. We would also expect that if a member was expelled from one designated body, they would not be able to join an alternative body without showing that they had achieved compliance with the regulations.

340. We expect that this approach would mean that the majority of managing agents would attain appropriate qualifications where they did not hold them already. However, we acknowledge that we cannot expect the designated bodies to regulate managing agents and firms who are not members of their body. In these cases, we think that local authorities should be responsible for undertaking enforcement action against managing agents who continue to operate outside of membership schemes. We propose that there be proportionate and effective sanctions in place that local authorities could issue where individual managing agents and firms operate without membership of a designated professional body and/or operate without the required qualifications. We consider that financial penalties are likely to be an appropriate sanction.

341. We recognise that this approach would create additional cost for managing agents and firms who are not already members of a professional body, through the registration fee they would be required to pay to the professional body. We also recognise that designated professional bodies may also have further requirements that they expect agents and firms to undertake as a condition of membership. Managing agents would also face costs in undertaking qualifications.

Option 2: Give government-approved redress schemes a role in the implementation of mandatory qualifications, supported by local authority enforcement

342. It is already a mandatory requirement under the Enterprise and Regulatory Reform Act 2013 and Estate Agents Act 1979, that property agents whose activities include selling, letting and/or managing properties in England must belong to a government-approved redress scheme. There are two schemes currently approved by government – The Property Ombudsman (TPO) and Property Redress (PR). This requirement does not apply to individuals who engage in such activity as employees. 

343. Under this option we would legislate to give redress scheme providers a further statutory role in the implementation of qualifications. We could require each managing agent firm to provide a list of employees to their redress scheme provider and confirm that those employees are qualified or working towards a qualification. The UK government could further legislate to require that agents undertake a set level of CPD and again this information could be provided to the redress scheme providers.

344. Under this model we would ask redress scheme providers to notify local authorities where firms do not comply with the requirements. In these cases, we think that local authorities should be responsible for undertaking enforcement action against managing agent firms who continue to operate without undertaking the required qualifications, using the information provided by redress schemes.  Similar enforcement action could also be considered against individual employees who do not gain qualifications. We propose that there be proportionate and effective sanctions in place that local authorities could issue. We consider that financial penalties are likely to be an appropriate sanction.

345. This model would utilise the existing database of members that the agent redress scheme providers hold and draw upon their sector expertise and resource. However, we recognise that this role would be a significant additional responsibility for the redress scheme providers and would require changes to processes, organisational structures and that there could be funding implications.

346. We recognise that that there is currently no requirement for property managing agents of freehold estates to be a member of a redress scheme and further consideration would need to be given to this if this policy option is taken forward.

Option 3 – Enforcement by local authorities with no statutory role for designated professional bodies or redress providers

347. Under Option 1 and 2 there is a role for local authorities in enforcement in support of either designated professional bodies or government-approved redress scheme providers. An alternative option is that there iis no formal statutory role for designated professional bodies or redress providers, and instead enfocement is the sole responsibility of local authorities. 

348. We would legislate to make local authorities responsible for investigating managing agents to check that they had undertaken or are working towards qualifications. We propose that there be proportionate and effective sanctions in place that local authorities could issue where managing agents operate without the required qualifications. We consider that financial penalties are likely to be an appropriate sanction. There would be no requirement for managing agents to join a professional body under this option, but professional bodies and the government-approved redress schemes could work with local authorities on a voluntary basis to provide information about managing agents who are operating in the sector and may be doing so without qualifications.

Implementation and enforcement: Approach in Wales

349. As set out above, there are some different legal requirements placed on managing agents currently in Wales. Furthermore, since there is no requirement for membership of a redress scheme in Wales, one of the options for implementation and enforcement outlined above would not be applicable in Wales.

350. We are interested to understand views on whether minimum qualifications for managing agents should be similarly mandated in Wales, and what, if any, adaptations would be required to the approach outlined above in order for it to respond to the different context in Wales.