The National Association of Estate Agents
Do agents really need to comply with all this endless regulation?
Many years ago you could get away being an agent on a wing and a prayer but that’s no longer the case whether it’s sales or lettings. You have to comply with the law and non-compliance can be extraordinarily painful for you and your business. While the industry is essentially unregulated and anybody can set up as an agent, if you do – but don’t know the laws – it’s like driving down the motorway the wrong way blindfold – you can do it but the risks and penalties are large.
David Cameron says he doesn’t want a generation of renters, but, rather, a generation of buyers. That’s easier said than done. Mark Hayward, NAEA
What’s your view of the current government?
On the positive side the government is overtly trying to now encourage home ownership. David Cameron recently said he ‘doesn’t want a generation of renters but a generation of buyers.’ This is easier said than done because they can’t deliver the new homes at the level that they are promising. You can’t just click your fingers and create new homes.
Are online agents are taking advantage of the industry’s lack of transparency?
The industry has always been accused as a whole of not communicating with its customers as much as it should do. The more transparency you can provide for what is happening in the process must be good news in justifying fees. While online agents say they will give full transparency it’s very passive transparency because it’s down to the consumer to find out rather than the agent to provide the information. A good estate agent should be holding your hand through the whole process.
Online agents can be full members of the NAEA providing they adhere to our regulations and take out professional indemnity and register with HMRC, for example. Then we’re happy to welcome them.
What percentage of the industry are members of the NAEA ?
Our members’ offices currently number 10,500 so it’s about 75 per cent of the industry.
Do consumers know what the NAEA is? There was a regional TV campaign last year which resulted in increased public awareness of who we are and what we do – we regularly survey consumers to measure this. And while it’s not as high as we would like, it’s certainly improving and our current PR push should too.
The number of homes being sold has declined dramatically. Why is that?
There is a view that the cost of moving has increased and is putting people off. This is partly because these costs used to be rolled up into mortgages but the government’s Mortgage Market Review put an end to that. Also, people increasingly don’t want the upheaval of moving and are staying in their homes much, much longer than they used to. The situation is self-fulfilling because there’s less property on the market and therefore people can’t find what they want to buy so I don’t think we’ll see the sales volumes that we saw prior to the recession for a long, long time.
What will the industry look like in 10 years?
Twenty years ago people said you wouldn’t recognise the industry now but, apart from the online agents, nothing has changed that much. I think we’re going to see further consolidation which is already happening. We’re also going to see an industry that’s far more focused on customer service that makes house moving pleasurable – then we’ve cracked it. At the moment no one looks forward to moving house.
Royal Institution of Chartered Surveyors
RICS says that it wants to make more progress in the property sector. What does that mean?
We’re trying to make RICS membership more accessible and relevant to the property industry. RICS is a broad church with over 140 specialisms of which residential is but one. So a chartered surveyor who operates just in lettings will have a more rounded knowledge including about housing supply, changes to building regulations and property laws – all of which impact on lettings.
I feel the Government could go further and introduce a form of licensing or registration for estate and letting agents. Andrew Bulmer, RICS
So in that sense the chartered surveyor has been a fairly high-end individual in the sector. But the property industry is changing fast and you don’t need to be a fully qualified chartered surveyor for many roles. So we have has created an entry-level qualification (AssocRICS) which is a tall but narrow one, so the breadth of knowledge isn’t there in the same way but the depth is because it’s expertise within a single sector.
Are there enough RICS members within the industry?
I would like to see more qualified RICS members in the sector because it would be good for consumers. But it’s part of a wider piece about having more qualified professional across the industry whether they are RICS or ARLA or NAEA. The sectors are now more technically demanding, and there is a need for consumers to be advised by professionals who know what they are talking about.
What is your view of the current government?
It would be worth prefacing my comments with the fact that RICS has a Royal Charter and that requires us to act in the public interest. So we will make our voice heard if we think the consumer is suffering detriment. But we are not a lobbying trade organisation.
The current government and its predecessor introduced laws that provide extra consumer protection and that we welcome. Where I feel they could go further would be to produce a form of licensing or registration for estate and letting agents. That could be provided by all of the organisations you’re interviewing here but we could compete within the market place for a share of the market. I think that’s where this particular administration is missing a trick.
Are online agents a threat?
With online agents it is the consumer who will decide. The roll-out of online services will continue and grow but I do not see a full scale exit of high street estate agents. It needs to be remembered that most agents are already online as part of the services they offer. Whereas an online-only offering, by its nature, is limited.
Association Residential Letting Agents
It’s been a legislative roller coaster over the past 18 months – what’s going on?
It is a tiny minority who bring the whole sector into disrepute and to tackle them we’ve had an awful lot of legislative measures introduced. The previous government rushed through a number of laws at the end of their time in power, plus new ones have been consulted on by the new government and are going through parliament at the moment. The past six months has probably been the busiest six months that I’ve ever seen.
When all this legislation is introduced I’m really hoping we have a period of bedding down rather than constant change. David Cox, ARLA
On top of this there’s been a huge devolving of power – Wales, Scotland and Northern Ireland, as well as the new regional super mayors, now have their own letting industry legislation on top of the national laws. For example, most recently, mandatory licencing of landlords and letting agents has been introduced in Wales.
So, particularly for agencies that operate across all jurisdictions and smaller agencies that work across borders there is now a lot of legislation to comply with. Another complication is the recent consumer protection legislation – which is law in England – has only just become law in Wales but we’re not sure about Scotland or Northern Ireland.
All this makes compliance difficult. Agents have so much they need to know about and that’s why ARLA, the NAEA and RICS can help.
Does ARLA think that the new government’s planned legislation makes it look a bit hostile to the industry?
I wouldn’t characterise it as hostility. To a large extent we have the remnants of the last government, so the changes to Section 21, retaliatory evictions and the smoke detectors legislation was already in place.
This government is taking a pragmatic approach to the sector. Earlier this year we asked for greater regulation of sales and letting with more professionalisation of those who work in it as well as consumer protection – but the minister has said he wouldn’t go down that route.
Instead the government has supported greater enforcement of the existing and recently-introduced legislation within the Housing and Planning Bill. And we’re really pleased with the result. Our biggest concern is that it’s still a largely unregulated market, and also that existing laws aren’t being enforced – so what’s the point in creating new laws?
Our big campaign at the moment is to get client money protection insurance made mandatory which we put in an as an amendment into the bill to protect consumers. They shouldn’t have to look around to see which agent offers it and which one doesn’t; it should be a level playing field.
When all this legislation is passed or introduced, I’m really hoping we have a period of bedding down rather than constant change to allow the legislation to start working on the ground. We’re really keen to see more institutional investment in the industry via, for example, via Build to Let but that won’t happen without a settled regulatory environment.
People are talking about ‘greater transparency’ in the industry created by the online lettings agents; what’s your view of this?
I don’t think the high street letting agent will fall in the same way the high street travel agent has. Tenants want to see real people when they’re thinking about their next home. Online appeals mainly to self-managing landlords and in this niche online agents will be able to take hold. But we need to look at the travel industry and learn from their mistakes and ensure we evolve with technology rather than have it damage our businesses.
Should tenant fees be banned?
I don’t think there’s any point ‘banning’ fees. Instead the market should be applied; i.e. agents who still charge them will not win business.
What percentage of the industry are members of ARLA ?
We have just over 8,000 members and just over 7,500 branches in the UK – between 50 and 60 per cent of the industry. I would like to see that higher though; the more we all come together, the greater the voice we have to talk to government and get things changed and improved.
For the novice – in a nutshell, what does UKALA do and why should an agent join?
UKALA is dedicated to representing the interests of letting and management agents in the UK and what sets UKALA apart is the business benefit derived from our unique relationship with the National Landlords Association (NLA), the leading association for private residential-landlords in the UK as well as a huge range of member benefits including membership of an independent redress scheme, staff development and accreditation, client money protection insurance and discounted tenant referencing and deposit protection rates.
The increased stamp duty on buy-to-let purchases will undoubtedly mean that new investment will diminish. Richard Price, UKALA
There’s been a great deal of legislation passed recently both by the outgoing Labour and incoming Conservative administrations – what’s your view of it?
While the Chancellor’s decision to restrict tax relief for landlords – announced in the Summer Budget – may not have a direct impact on agents, it will inevitably result in increased sector costs and rents, while heightening churn.
Furthermore, the increased stamp duty on buy to let purchases from next year – announced in the Autumn Statement – will undoubtedly mean that new investment to the sector will diminish, leaving fewer properties in an already pressurised market and increasing competition among agents for business.
While these announcements represent a political win for this government in the short term, it will come at the expense of the tenants who rely on private rented housing in the long term, as supply dries up and rents increase.
A lot of people are talking about ‘greater transparency’ in the industry created by the online lettings agents; but what’s your view of this?
We don’t agree that online agents are leading the way with regards to transparency; it’s just unfortunate that the questionable practices of a minority of agents tend to give the entire sector a bad name. The reality is that the majority of agents are already transparent about the way they go about their business and their clients recognise this.
Do enough agents/landlords know about UKALA – do you research awareness and is membership growing?
We only undertake research with UKALA members but membership has risen by 16 per cent in the last year as more and more agents are realising the benefits of coming on board.