Property agents face new licensing rules as government targets excessive fees

The government has announced plans to strengthen leaseholders’ rights by introducing regulation for property agents and capping fees.

Under the proposed rules, the government will legislate to introduce caps on fees, setting limits on what landlords can charge.

The government claims, under the current system, leaseholders “can be forced to pay fees in order to receive their landlord’s permission for simple requests like keeping a pet”.

Property agents will be required to obtain a licence

The government has announced plans to introduce independent regulation of property agents for the first time, alongside new measures to clamp down on administrative fees charged to leaseholders.

Under the proposed reforms, property agents will be required to obtain a licence and hold appropriate qualifications to operate. The regulator will have the power to revoke licences if agents fail to meet the required standards.

The legislative changes will also target administrative fees charged by landlords for providing documents on request, such as building safety certificates, or for notifying them of a change in mortgage provider.

A public consultation will be launched to determine which fees should be capped and the level of the caps for each item.

The government have also announced they will introduce a bill before Christmas for “long overdue leasehold reform”.

Speaking at the Labour party conference, housing secretary Angela Rayner, said: “It’s not just some freeholders that can exploit leaseholders and tenants. Estate agents, letting agents and property management agents can do too.

“A sector with many decent businesses, of course. But they are undermined and undercut by far too many cowboys, crooks and con artists. And homeowners and renters and leaseholders pay the price through hidden fees and traps. People who should be excited about buying a home are tricked into using overpriced in-house services.

“Unqualified, unlicensed and unregulated agents are taking thousands from their clients and mishandling their money. With no transparency or accountability, vultures can take advantage.

“Now, under this prime minister, I’m proud to do so myself. Conference we will legislate for an independent regulation to reign these cowboys in. They will be required to follow the rules and if they don’t, their licenses will be taken away.”

Industry reaction

Nathan Emerson, CEO of Propertymark, said: “Propertymark has long campaigned for action in this area and welcomes the UK Government’s commitment to stronger regulation of property agents. Professional property agents are increasingly being undercut by unqualified and inexperienced operators who are not held to the same professional standards. This is unfair to responsible businesses that invest in qualifications, training and compliance, and leaves consumers exposed to poor practice without adequate protection.

“Building on the professional standards, structures and good practice already established across the sector will be critical to making this a success and ensuring the new regime is understood, enforced and adhered to consistently.

“Propertymark looks forward to working constructively with the UK government to ensure regulation delivers higher standards, effective enforcement and a genuinely professional property sector.”

Sean Hooker, head of redress at Property Redress, welcomed the announcement but cautioned that the sector has been here before.

“This issue has never been particularly controversial within the sector, with industry leaders consistently calling for tighter regulation, mandatory qualifications and effective enforcement.

“Despite warm words and the establishment of the RoPA working group, which produced a comprehensive blueprint for how regulation could work, successive governments have failed to grasp the nettle and get something meaningful onto the statute books. This new promise and full-blooded endorsement of the policy by the Secretary of State, under the banner of Hope Again, gives us optimism that this measure will be rapidly implemented.”

Mr Hooker also welcomes greater clarity on the direction of leasehold reform and the commitment to tackle unfair permission charges imposed on leaseholders for things such as keeping a pet or changing a front door.

He said: “We tackle complaints from leaseholders about property managers, and these are some of the most fractious cases we see. The property management industry, on the whole, provides a good service in difficult circumstances, but is often hamstrung by unfair lease restrictions that can impose unreasonable or unnecessary limitations on leaseholders.

“This imbalance, where often faceless freeholders hold all the cards, needs to be addressed with the introduction of a register and redress for these landlords, as well as clear and transparent charges and responsibilities.”

Scott Goldstein, property disputes partner at Payne Hicks Beach, said of the reforms: “The government’s reforms of the leasehold sector continue at breathtaking pace.  All parties should welcome the proposals to independently regulate and license managing agents.  Similar proposals have been considered before, and they are overdue.

“Tenants benefit from being able to rely on a competent managing agent, who can be a professional point of contact to deal with maintaining and administering the property.  However, these new proposals will also oblige managing agents to ensure landlords understand their own enhanced regulatory obligations, and (just as importantly) should give landlords some form of redress if they fail to do so.”

Jason Charles, head of education at Rightmove, said: “We support the government’s commitment to formal regulation in the property industry, which is something many agents have been getting ahead of through official education for their teams. We first made official qualifications available for agents back in 2022, and over the past year demand has surged by 128%.

“Rightmove research shows seven in 10 home-movers would prefer to work with a qualified agent, while over 70% of renters and homeowners believe agents should hold formal qualifications. Agents play a critical role in helping people navigate one of life’s biggest decisions, and clear standards, qualifications and effective regulation can help improve consumer confidence. We look forward to working with the government on the proposals.”