Regulation & Law
News articles looking at national legislation and local regulation and the application of law to the residential property industry.
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Compulsory CMP membership for letting agents gets green light
All lettings agents will soon be required by law to sign up to an approved Client Money Protection (CMP) scheme or face a fine of up £30,000, it has been announced. This is the government’s response to its recent consultation on CMP which has run for three months and received 117 responses. The government will now move to make CMP scheme membership mandatory for letting agents, with plans to set up a government-approved but ‘market led’ approach to provision, similar to the existing redress and deposit protection schemes. Many of the consultation’s respondents agreed that these schemes should be approved and offer minimum standards of service including having a stringent claims process in place. The respondents included ARLA, which argued in its consultation submission that a single scheme operated by government would “stifle competition in the market and may ultimately lead to agents paying a much higher CMP levy than they currently are without offering any greater protection for consumers”. Mediterranean cruises ARLA also highlighted the case of Devon letting agent Janine Pickett, who in 2014 was found to have paid for Mediterranean cruises and a £7,000 Welsh pony out of client funds, cash that – because her franchisor was…
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Lettings sector to face huge reforms designed to weed out rogue agents
A new compulsory code of conduct for agents backed by mandatory qualification for at least one member of staff and a new independent regulator have been announced for the lettings and property management sectors by the Ministry of Housing, Communities and Local Government (DHCLG). The details of the new code will now be thrashed out by a working group of lettings, tenant and regulatory representatives, with proposals nailed down by early 2019. The DHCLG announcement, which was released during the Easter break, revealed that it wanted to protect the UK’s nine million private renters from the unexpected costs, vague bills and poor quality repairs offered by rogue agents. “Most property agents take a thorough and professional approach when carrying out their business, but sadly some do not,” says Housing Minister Heather Wheeler (pictured, left). “By introducing new standards for the sector, we will clamp down on the small minority of agents who abuse the system so we can better protect tenants and leaseholders who find themselves at the end of a raw deal. Other measures outlined by the DHCLG include the promised reform of leasehold including a new system to help leaseholders challenge unfair fees, help to switch managing agents…
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MPs recommend to tighten up draft Tenant Fees Bill including five-week deposits
Housing committee ignores industry on damage bill may do to housing affordability and letting agent viability, and recommends smaller deposits, tighter rules on other allowable fees and harsher policing.
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Welsh buyers rush to complete before April 1st Stamp Duty hikes
A predicted rush to sell Welsh properties at the top end of its property market has been taking place in recent weeks as buyers have attempted to beat the April 1st deadline for the principality’s new devolved Stamp Duty regime. The way that the slabs of tax banding are now arranged in Wales mean the duty rises more harshly than in England for those who buy properties over £402,000, although the new system is more generous to those buying under this price threshold than the English system. Although a £402,000 buyer pays only £200 more than their English counterpart, the differences are more stark further up the value chain. For example, a home worth £500,000 in England attracts a Stamp Duty bill of £15,000 while the same purchaser in Wales will pay an LTT charge of £17,500. But a house worth £1.5 million will attract an LTT bill that’s £17,450 higher than a similar English property. Rush to complete Welsh law firm Geldards recently predicted that the changes would lead to a “stampede” in upmarket buyers completing before this Sunday. But removals website CompareMyMove.com, which is based in Wales, says overall the new LTT will benefit most ‘average’ Welsh buyers.…
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Tenancy Deposit drama makes EastEnders episode
EastEnders continued its tradition of tackling social issues head-on when it made a deposit dispute a key storyline. The recent depiction has been praised by the TDS (Tenancy Deposit Scheme), with the organisation saying it has brought to light important issues in the private rental sector. The plot centered on a landlord who returns to Albert Square with money problems. He decides to terminate a tenancy and uses the check out as an opportunity to make some money for himself. Although the property had been left in good condition, the landlord pours coffee over the carpet and blames the tenant, stating he’ll have to keep the deposit to until he knows how much it will cost to rectify the damage. “The vast majority of landlords look after their tenants and abide by the law, but there’s a small minority who don’t and that can be a problem if tenants are unaware of their rights.” While maybe not as thrilling as shady dealings, shootings and secret love children, the deposit storyline has brought into focus a number of issues that many landlords and tenants can relate to. As well as questioning whether the TV landlord had protected the tenant’s deposit, the…
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Compulsory Client Money Protection moves a step closer
Switch to mandatory Client Money Protection (CMP) could come in a matter of weeks, with Government expected to finalise and release its regulations imminently.
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No-fault eviction numbers declined by 5,000 last year, official figures show
The government’s recent efforts to end unfair ‘no-fault evictions’ appears to be working after the most recent figures from the Ministry of Justice (MoJ) revealed a sharp decline in their use. There were 29,611 accelerated possession cases or Section 21 ‘no-fault evictions’ last year, the MoJ figures show, nearly 5,000 fewer than the year before. Evictions expert Paul Shamplina of Landlord Action says the slump in no-fault evictions is largely due to the Deregulation Act 2015, which came into force in October that year. It has made no-fault evictions much more difficult and protected tenants against unfair retaliatory evictions when they report legitimate complaints about a property. Correct paperwork The act requires that tenants are served the correct paperwork when they start a tenancy including providing a copy of a property’s EPC, Gas Safety certificate, proof that the deposit has been legally protected and the government’s ‘How to Rent’ booklet. If this paperwork is not served correctly, evictions are much more difficult. Paul Shamplina says this has stopped a lot of landlords using accelerated evictions, often because they aren’t aware of the legislative requirements and then, when a tenant stops paying the rent – which make up 73% of evictions…
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Emoov investigated by advertising watchdog for third time since 2015
Hybrid estate agent emoov has been investigated for a third time by the Advertising Standards Authority (ASA) this time over claims made on its website about how much vendors can save by using its service when compared to traditional agents. An agent in Lincolnshire complained to the ASA about the claim on an www.emoov.co.uk webpage that said “our activity around Scunthorpe…£2,672 Average Customer Saving” and “our sellers saved an average of £4,378 in fees with emoov”. The complainant also highlighted that emoov had published two different fixed fees on the page without explaining the difference, one for £795 and the other for £679. The person who contacted the ASA challenged whether the savings claims could be substantiated, and whether the different fixed fees were misleading. Promises After being contacted by the ASA, emoov agreed to take the comparative claims down and has promised not to repeat them, and now makes it clear on the page that it has only one fixed fee of £795. Emoov has been investigated by the ASA twice before for being misleading, in 2015 and 2016, both of which included complaints made to the advertising watchdog about ‘fees saved’ as well as other issues including competitor…
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Be careful what you discuss with competitors down the pub, warns CMA
The Competition and Markets Authority (CMA) has warned agents who attend informal and formal industry gatherings how careful they need to be when chatting with competitors. The hundreds, if not thousands of informal and formal property industry gatherings in pubs, hotels, golf courses and cafes up and down the country every year can lead agents to “fall foul of competition law”, the CMA warns in its latest guidance. It also highlights within the guidance somewhat ominously the combined £750,000 fine it slapped on a local trade association, three estate agents and a newspaper publisher for cartel activity in 2015. Even the most mundane conversation can cross the line and members of trade associations “must be mindful of their conduct in relation to other members of their trade association who are likely to be actual or potential competitors of theirs,” it says. “Trade associations and their members need to be alive to evolving risks of breaking competition law when discussing issues facing their industry. “Topics such as salary benchmarking or perhaps an industry ‘commercial response’ to economic or structural changes in the market may fall into this category.” Other types of conversation agents should be wary of include future pricing, discounts,…
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Labour’s pet policy is “bizarre choice” says National Landlords Association
Labour’s recent proposals to give tenants greater rights to live with their pets has been questioned by the National Landlords Association. In a podcast covering a wide range of subjects published today, its Head of Policy Chris Norris (pictured above, right) says he thought Labour’s decision to back the right to keep pets for tenants a “bizarre choice”. “I’ve got to say I despair with this sort of announcement from the Labour party,” he says. “The NLA is completely neutral when it comes to party politics but of all the things in housing that really demand attention, whether private tenants have the default right to a pet is a bizarre choice.” Chris went on to say that the policy is puzzling because current legislation and case law means consumers are protected, because landlords cannot refuse a tenant with a pet unless they can give a good reason. “You can’t put a ‘no pets’ clause into a tenancy agreement and if a tenant asks a landlord about pets and the landlord says no, they must put forward a valid argument why not,” says Chris. Deposits He also says the government’s proposals to cap deposits at four weeks will make it more…
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