27 July 2014
Mandatory licensing of all letting and managing agents would be by an independent body that is likely to cost £650,000 to set up and a further £750,000 to run each year.
Agents could expect to have to pay £120 annually to belong. On top of this
The mandatory scheme would insist on professional indemnity insurance, 'hurdles' of entry, a code of conduct, and client money protection. This is expected to cost around £300 per annum for small and medium sized agents.
The benefits, to landlords and tenants, would outweigh the costs, assuming that there are currently 900,000 tenancy agreements where no client money protection is in place: it is thought 0.2% of these tenancies could end with claims.
The figures are in a new impact assessment report released by the Government this week.
The report stresses that exact costs will not be known until the final form of the independent body is known. Currently, there is a consultation about this.
The report follows the Government's official response to the Rugg Report, which proposed mandatory licensing for all letting and managing agents in October last year.
The impact assessment report says that of around 8,000 letting agents in England, about half are totally unregulated - ie, they belong to none of the official membership bodies. It also notes that even where lettings firms have misappropriated money or gone bankrupt, there is nothing to stop them setting up again - just as there was nothing to stop them setting up in the first place.
The deadline for responses to the consultation exercise is August 7.
A summary of responses will be published following that deadline and more detailed proposals emerging from that process will be published for consultation in a White Paper in the autumn.
Full regulation of letting and managing agents would require primary legislation which would not be in place until 2011 at the earliest. However, there are a lot of hurdles for the current Government to jump through - not least, whether it will still be in government.
A similar impact assessment report was published this week for landlords, who are also facing the prospect of mandatory licensing.