The trade body for conveyancing firms highlighted a number of issues within the leasehold market, including the unreasonable fees charged by lease administrators, duplicated charging, the ‘invention’ of additional services purely for revenue gains, and ‘significant’ delays in service provision.
It comes in response to the Department for Communities and Local Government’s (DCLG) call for evidence on the regulation of letting and managing agents to ascertain the necessity for regulation to protect tenants and leaseholders.
The call for evidence asked how regulation and transparency could be improved, what qualifications should be required of agents, and how consumers can be empowered within the market.
The move comes amid other state measures focussing on the letting sector, with upcoming laws to ban letting fees, and the mayor of London Sadiq Khan announcing plans to name and shame exploitative landlords and letting agents.
The association said that laws should be made to ensure reasonable fees are charged, and a limit on services created so that new ones cannot be “invented”, the CA also said that a menu of charges should be set by the Secretary of State and reviewed biennially in line with the retail price index (RPI).
The CA also said that administrative services should be delivered within five working days of receipt of payment, or have the fee refunded.
Furthermore, any lease administrator charging another party to provide services should be required to be registered with a fit-for-purpose redress scheme, which should include the provision of services in both letting and property management, and should be funded by a per complaint payment regardless of whether the complaint is upheld.
In addition, the association also called for a licensing scheme for all managing agents to ensure professional conduct. It argued that more resources should be injected in Trading Standards Offices to support effective enforcement and allow action to be taken against rogue landlords and agents.
Beth Rudolf, director of delivery at the Conveyancing Association, commented: “This area has been a major concern for the CA for some time and our response seeks to ensure that the growing costs and delays that are a seemingly ‘natural’ part of dealing with certain lease administrators are no longer deemed acceptable.
She continued: “We have always encouraged our members to educate lease administrators using template letters explaining the legal obligations and case law around unreasonable fees, but our data shows that the situation has in fact got worse.
“Regulation seems to be the only way of achieving solid consumer protection in a scenario where the payer of the service is not the contracting party for the service. The fact that the industry, including the managing agents, have been calling for regulation themselves is compelling and we believe now is certainly the time for action to be taken,” Rudolf added.
A personal touch
The CA said any lease administrator undertaking charged-for services, or has access to client money or property, required regulation.
It said depending on the role undertaken, forms of training, qualifications or a persons test should be introduced, as “anyone with access to client money should be aware of the rules and protection of client funds, and anyone with access to client property should be CRB-checked and aware of the relevant liabilities and obligations of a party to a lease or tenancy agreement.”
Moreover, the CA argued that professional indemnity insurance should be mandatory.
“Our response not only highlights the issues that cause problems, but provide a range of deliverable solutions that will give far greater protections to consumers,” said Rudolf.
“We believe this would immediately reduce complaints and problems, and would actually provide fairness to lease administrators themselves,” she continued.
Rudolf added: “Leasehold has been one of, if not the, defining issue for the housing market in 2017 and this consultation provides us with the opportunity to change it for the better. There are a large number of vested interests in this sector who would very much like to maintain the status quo – it is therefore incumbent on everyone to back these proposals and to ensure that the government is able to deliver real change in this area and create a positive experience for all stakeholders.”