Client Money Protection Schemes for Property Agents (Approval and Designation of Schemes) Regulations 2018 — House of Lords, 2018-06-13
Topic: Housing
Richard Best (Crossbench, Unknown): My Lords, I declare my relevant interests as in the register. I commend the Government’s two sets of regulations, which will make it compulsory for anyone who wants to operate a lettings agency to have client money protection insurance that is effective and not just a sham I felt unable to speak on this subject in this Chamber when the noble Baroness, Lady Hayter, pursued it so successfully, as I was then the remunerated chair of the Property Ombudsman, which was involved in this debate. However, I retired from that role last year and can now say what I think without any conflicts of interest Compulsory insurance sounds a dull technical matter of little interest, except to the landlords whose money is held by agents—mostly the rental payments due to the landlord later—who should now be better protected. However, the benefits of these measures go much deeper than simply covering a loss to a landlord if their agent disappears or goes out of business. These regulations will remove altogether from the lettings industry all those often small-time and sometimes pretty dubious property agents from whom not just landlords but tenants need to be protected In the absence of regulation, anyone can set up as a property agent. At present, no qualifications or training or financial resources are needed. The requirement to belong to a compulsory client money protection scheme will weed out all those firms, often comprising a single individual, that insurance companies assess as too risky to insure. Those are the men or persons of straw, who have no expertise and may even have a criminal record. Removing the less desirable elements from the still somewhat fledgling lettings industry is a necessary precursor to the forthcoming agents’ fees ban—the planned ban on the phenomenon of agents charging fees to tenants as well as landlords. This important ban is the next item on the list of measures to clean up the world of private lettings. It will often be the least reputable agents who have been making their money by persuading landlords to use their services by undercutting the fees that they ask of landlords and, instead, squeezing the tenant, who has no choice in the matter. The CMP regulations will make the fees ban more successful by removing in advance all those agents who are unable to get the obligatory CMP insurance My question to the Minister is about enforcement. We know that the problem with all aspects of regulation for the private rented sector is that trading standards officers and, in other contexts, environmental health officers, are not geared up to enforcing further regulations. Budgets for the work of these officers have been massively reduced as part of the wider cuts to local government spending. What steps is the Ministry of Housing, Communities and Local Government taking to ensure the additional enforcement that these regulations—and others covering property agents already enacted or yet to come—will require? Is it expected that the opportunity to retain the money from civil penalties will provide enough finance to cover the extra enforcement costs? While I wholly support the CMP regulations before us, it would be helpful to have reassurance that their effectiveness will not be undermined or blunted by an absence of resources for their all-important enforcement.