While 46.5% of agents see regulation as a standard-raising opportunity, 17.6% of smaller agencies would leave the industry because of it.
Over the past decade, various initiatives aimed at raising standards in property management have seen slow progress in the sector. However, in October 2024, Labour Housing Minister Matthew Pennycook renewed the Government’s commitment to formally regulate property agents - a shift that could bring clearer standards, stronger accountability, and a more professionalised sector.
While this focus on regulation could benefit agents, landlords, and tenants alike, it could also drive some away from the industry. Here’s what letting agents need to know:
- What is the Regulation of Property Agents (RoPA)?
- When will the regulation be introduced?
- How are letting agents currently regulated?
- Is additional regulation of letting agents needed?
- Conclusion
What is the Regulation of Property Agents (RoPA)?
The Regulation of Property Agents (RoPA) is a Government working group led by Lord Best. It proposes that "property agents [are] regulated by an independent regulator, with mandatory qualifications and a code of practice". The regulations focus on estate agents in the UK and managing agents in England.
Although no changes have been implemented since conversations began in 2019, Housing Minister Matthew Pennycook stated that “the Government is committed to ensuring that those living in the rented and leasehold sectors are protected from abuse and poor service at the hands of unscrupulous property agents” in October 2024.
When will the regulation be introduced?
There's currently no set date for when RoPA will become law, but an inquiry in February 2024 hosted by Baroness Taylor emphasised the need for quick action. Like Lord Best’s recommendations in 2019, the inquiry addressed:
- Whether a new regulator of property agents should be introduced
- Whether the current redress schemes are working effectively
- Whether the regulator should cover landlords and freeholders, as well as property agents
Key findings from the inquiry
During the inquiry, Conor O’Shea, policy and public affairs manager for Generation Rent, gave evidence on behalf of tenants, raising a range of issues that tenants can have with letting agents, such as raising the rent, multiple tenants looking for properties, and the difficulties of bidding wars.
He stated that there were numerous conflicts between tenants and agents, particularly a “crisis” in the setting of pre-tenancy and tenants acquiring a home.
Following the inquiry, the Lords committee addressed a letter to Michael Gove, then Secretary of State for Levelling Up, Housing and Communities, warning that any Government delay impacts tenants, leaseholders, and others who are exposed to malpractice.
Baroness Taylor, Chair of the committee, stated: "During our inquiry, there was near unanimous evidence from consumers, industry and existing bodies on the need for statutory regulation of property agents and the establishment of a new regulator".
The committee is also calling for legislation or a published response from the Government to the report establishing:
- Mandatory qualifications for property agents
- Industry codes of practice, including focusing "on achieving good outcomes for consumers", operated by the new regulator
- A single ombudsman for property agents and landlords
- A new regulator funded by "modest fees or charges on those that it regulates"
The Government responded to the letter in May 2024, stating they would address regulations of property agents in due course. However, due to the General Election in July 2024, this did not occur.
How are letting agents currently regulated?
Unlike in Scotland and Wales, English letting agents aren’t subject to statutory regulations or specific licences.
Since 2014, all agents must belong to a Redress Scheme, allowing tenants and landlords to lodge complaints and with local councils enforcing fines up to £5,000. Yet, complaints remain high, with nearly 14,000 logged in 2022.
Propertymark says that tenants' most common complaints are unfair or excessive letting fees. According to its report, "complaints can often arise when Consumers believe they have been misled by their Agent about the charges incurred for using their service.”
Unfair or excessive fees mean that an agent should be transparent about their charges regarding a wide variety of topics, including the fee an agent charges to a landlord, the need for agents to highlight any unusual charges (e.g. ‘check-in or check-out fees’ or ‘security deposit handling fees’), and repair and maintenance fees.
What are the minimum entry requirements for property agents?
Letting agents in England currently don’t need any formal qualifications to operate. A 2017 call for evidence government report found that 75% of respondents supported stricter standards.
In 2023, Pennycook proposed requiring letting agents to hold at least one A-level qualification, adding fuel to the ongoing debate around industry standards.
Supporters argue that this would set a minimum standard, ensuring agents can handle complex regulations and provide better services. However, critics believe it risks pushing out experienced agents who lack formal qualifications but bring years of practical knowledge.
What fees can letting agents charge?
Letting agents currently have to adhere to two strict rules and legal obligations to protect their landlords and tenants: The Tenant Fees Act and Client Money Protection.
The Tenant Fees Act governs whether a letting agent can legally retain and return a holding deposit from tenants in England. They cannot keep a holding deposit unless a fee is “permitted” or the tenant has failed certain checks during referencing.
This act applies to all assured shorthold tenancies, student accommodation, and licences to occupy housing in the private rental sector.
Everything you need to know on retaining and returning holding deposits under the Tenant Fees Act.
Letting agents must also join a Client Money Protection scheme if they hold a tenant’s or landlord's money during a tenancy. These schemes were introduced to ensure landlords and tenants will be compensated if an agency cannot repay the money originally given.
It must be clear whether or not a letting agency is part of a Client Protection Scheme. If it isn't, it could be fined up to £30,000.
Is additional regulation of property agents needed?
Reports highlight low trust in letting agents. Research from Which? identified common issues such as:
- Tenants are disempowered and dissatisfied
- Unexpected and unfair fees
- Widespread bad practice
- Tenants and landlords losing money
Goodlord’s State of the Lettings Industry report, however, underscores the potential impact of introducing regulation. Although 46.5% see regulation as a standard-raising opportunity...
8.4% of agents indicate they would leave the market if the requirement were imposed.
Meanwhile...
22.7% of agents say they would cut staff, and 17.6% of smaller agencies may consider leaving the industry altogether.
And...
42.6% fear higher fees that could drive cost-sensitive landlords to self-manage.
Goodlord’s view on ROPA
Costas Frangeskou, Goodlord’s Director of Growth, gives his verdict on the potential introduction of ROPA.
“The fact that everyone in your business has to be regulated, including Saturday staff, emphasises how wide-reaching RoPA would be.
“Letting agency owners who’ve been in the profession for decades will have to go back to studying, which is likely to force some to take more of a back seat away from customers. Some may leave the profession altogether.
“But there are also plenty of positives to take.
“Regulation of the industry is long overdue, which will protect the industry as a whole, including tenants, landlords and agents. All key stakeholders being held to the same standards will make horror stories less likely, and this can’t be a bad thing.”
Conclusion
While RoPA will raise costs for agencies and deter some from the profession, it promises to bring clarity, accountability, and professionalism to the property industry. By staying informed and adapting to these changes, letting agents can navigate new standards and continue to deliver reliable service to landlords and tenants alike.
This article is intended as a guide only and does not constitute legal advice. For more information, visit gov.uk.
