Upcoming estate and letting agent laws

Just a few years ago the only industry-specific laws estate and letting agents had to comply with were the Estate Agency Act (1979) and the Property Misdescriptions Act (1991). That has expanded considerably recently to an extensive list that now includes 145 regulations covering almost every area of sales and lettings activity.

This includes client money protection, rental deposits, gas safety regulations, Right to Rent, MEES energy efficiency regulations, human habitation standards, money laundering prevention, redress scheme membership, the amended Town and Country Planning Act covering for sale boards, and local HMO and landlord licensing schemes.

That is not the end of it. Here’s our checklist for estate and letting agents wondering what legislation is coming next. Please note, these planned changes are for England only.

Tenant fees ban

On June 1st 2019 the much debated Tenant Fees Bill becomes law in England, banning all fees charged to tenants other than default fees (i.e. charges for ‘defaults’ by a tenant such as losing their keys), rental deposits (of no more than five weeks’ rent) the monthly rent and holding deposits (of now more than one weeks’ rent). Other charges are allowed including utilities and council tax if included in the tenancy agreement.

These changes only apply to new tenancies signed after June 1st. Next year on the same day the law then becomes retrospective, covering all tenancies regardless of when they started.

Please note: A tenant fee ban is already in place in Scotland and is due to go live in Wales during the Autumn.

‘DSS adverts’

The government has said it wants to ‘stamp out’ the practice of landlords asking for ‘No DSS’ (and similar terms) to be included within letting agents’ online and newspaper adverts. Zoopla has already moved to remove ads that feature such restrictions, and MPs in parliament have been busy recently quizzing industry leaders about how best to stop the practice. No proposed legislation has been framed yet.

Referral fees

Trading Standards issued new guidance on referral fees earlier this year, warning sales and letting agents that they must be as transparent as possible with clients about mortgage, conveyancing and other referral fees or face prosecution. The government has hinted that it may bring in further legislation for estate and letting agents to ban referral fees outright.

Leasehold reform

One of the key planks of the government’s attempts to fix the UK’s ‘broken’ housing market has been to reform the way leasehold properties are bought and sold. New legislation is currently being framed while an ongoing consultation is completed.

The government has already said it wants to ban the sale of leasehold houses and make leasehold contracts for apartment sales to be much fairer, transparent and affordable during their lifetime. Expect legislation on this next year.

Housing court

The government has suggested that the complaints process for tenants who seek redress in disputes with landlords and letting agents is weak, complex and costly. A consultation with consumer groups and industry representatives to set up a national ‘housing court’ has now begun. If it gets the green light, we could expect to see legislation later this year.

Reservation agreements

The government wants to reduce the significant number of property sales that fall through every year and believes that a formal reservation agreement would give both buyers and sellers greater confidence about each other’s intent.

Both sides would commit at a much earlier stage in the process. Instead of putting a deposit down at exchange, buyers will pay a £1,000 down payment when they make an offer while both sides would sign a statement of intent. If the seller pulls out without good reason, they will pay a financial penalty and if it is the buyer, they’ll lose their deposit.

The Ministry of Housing, Communities and Local Government believes it has public backing for the move, claiming that 50% of buyers and 70% of sellers are willing to participate in the scheme. A draft ‘statement of intent’ has already been issued by the ministry, and a trial is expected to be completed later this year.

Section 21 Evictions

The eviction process in the UK is to be overhauled and, following an industry and consumer consultation, legislation brought forward most likely next year. This is expected to include the scrapping of ‘no fault’ Section 21 eviction notices and the reform of the remaining Section 8 notice system. The government has stated that it wants to increase tenant security but also enable landlords to repossess a property if they have a legitimate reason to do so.

Mandatory qualifications

Housing Secretary Sajid Javid recently announced that the government intends to legislate ‘soon’ to force all estate agency owners and staff to hold minimum standards of industry qualifications. Details of what these will be have yet to be framed.


Author: Nigel Lewis, property journalist