Housing: Letting and Managing Agents

Tuesday 28th March 2017 Lords Chamber

Question

14:52

Asked by

[Baroness Hayter of Kentish Town]

To ask Her Majesty’s Government whether they will make membership of a client money protection scheme mandatory for letting and managing agents.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I thank the noble Baroness and the noble Lord, Lord Palmer of Childs Hill, for their time and commitment to the client money protection review. I am pleased to announce that the Government intend to make client money protection mandatory in line with the recommendation of the review chaired by the noble Baroness and the noble Lord, Lord Palmer of Childs Hill. This will ensure that every agent is offering the same level of protection, giving tenants and landlords the financial protection that they deserve. The Government will consult on how mandatory client money protection should be implemented and enforced.

[Baroness Hayter of Kentish Town (Lab)]

Well, that has taken the wind out of my sails. Will the Minister accept my thanks? The House will recall that we put into the Housing and Planning Act the reserve power to do this but at that point the Government were not quite convinced. However, as the Minister said, along with the noble Lord, Lord Palmer, we did the report, and the recommendation was published only yesterday. Today’s news is really good for tenants and landlords. It means that if any letting agent goes bust or makes off, the client’s money is safe. I hope the Minister will accept my thanks.

[Lord Bourne of Aberystwyth]

My Lords, I certainly will. That was a typically gracious response from the noble Baroness. It was a very well-reasoned report. Many people had been called to give evidence, so it was very strongly evidence-based. As I say, we will be consulting on implementation and enforcement. I am sure that we can talk about it in the meantime.

[Lord Palmer of Childs Hill (LD)]

My Lords, I have had a little more time to get some wind in my sails. I thank everybody who took part in this review: my co-chair, the noble Baroness, Lady Hayter, the ministry and the civil servants, who were incredibly helpful. However, the review raises ongoing questions for the Government to tackle. For instance, enforcement is a key to success. Will the Minister tell us what he intends to do about the recommendation in the report that the Government consider,

“authorising a prime authority for enforcement, recognising CMP schemes and providing up to date information”?

Without that, the mandatory scheme will not have teeth.

[Lord Bourne of Aberystwyth]

My Lords, once again I thank the noble Lord for the part he has played in this. He asked specifically about one aspect of the consultation. As I say, we will be consulting on enforcement and implementation. He rightly draws attention to the fact that on occasion there has been a prime authority in this sort of area supervising the enforcement—Powys was an example used in the review, although in this instance, because it is England only, it cannot be Powys. A strong case has been made out, but of course we will be consulting on it.

[Baroness Gardner of Parkes (Con)]

My Lords, is it not essential in producing this final scheme that it should be as fair and as protected as the deposit protection schemes which exist for tenants’ deposits at present? In particular, there needs to be some kind of recognition that estate agents have to receive money in order to get the security checks, references and other things they need. They have to be carefully considered as well. It has to be fair to all parties.

[Lord Bourne of Aberystwyth]

My Lords, it certainly does need to be fair to all parties. The evidence from the consultation was that about 85%, if I am not mistaken, backed the need for enforcement in this area, so that obviously was a key factor. I agree with my noble friend that the consultation will need to ensure that it is fair and equitable across a wide variety of people.

[Lord Best (CB)]

My Lords, I declare my interest as the chair of the council of the Property Ombudsman, which deals with complaints about managing and letting agents. I congratulate the noble Baroness, Lady Hayter, on her persistence in pursuing this matter and congratulate the Government on yielding to that persistence. Would the Minister agree that the value of this is not just about protecting landlords if agents go off with the money but about weeding out the more dubious and dodgy managing and letting agents because they will not be able to get the insurance that will now be mandatory?

[Lord Bourne of Aberystwyth]

My Lords, I agree with the noble Lord. First, yielding to persuasive argument always seems to be the best and most sensible course to pursue, but I also agree with him about the importance of taking account of all those views and ensuring in the consultation that we act equitably and fairly across the piece.