A professional with experience in both financial services and property has warned that the baby could be chucked out with the bath water if agents need professional qualifications to practise.
Meanwhile, agents are asking why it has taken so long for ministers to announce mandatory qualifications when they could have been brought in 39 years ago under existing legislation.
Rob Clifford, commercial director at property specialist SDL and CEO of Century 21 UK, said yesterday that good agents should not have to quit because they are not natural exam-passers.
He said: “There are many very good estate agents out there who are not professionally qualified or vastly experienced, but are actually doing a brilliant job.
“It shouldn’t be about driving these people out of the industry.
“Instead, we should be focusing on the ‘men of straw’ who can’t afford to run a competent business or compensate consumers who suffer failure. These are the ones who need to go.”
Clifford, whose CV includes stints at West Bromwich Building Society and Virgin Money, said: “It’s been 18 years since regulation and mandatory qualifications for mortgage advisers were introduced, so it’s certainly not before time.
“This is the last such industry with no barriers to entry and we’ve been left in a situation where an unqualified carpet fitter or a van driver can trade as an estate agent without evidencing competence.
“I’m not surprised many have been left wondering what on earth has taken so long to get to this position where the Government is finally taking it seriously.”
However, he cautioned: “It will be interesting to see if this [regulation of estate agents] goes in the same direction as mortgage regulations, which started with a mandatory qualification and then moved on to professional indemnity insurance, the Ombudsman and eventually full statutory regulation.”
Meanwhile, a number of readers were yesterday commenting on the fact that the Government already has long-standing powers to enact minimum standards of entry on agents.
All successive governments have needed to do for the last 39 years is lay a Statutory Instrument before Parliament.
However, it appears that the current government preferred to go the route of headlines suggesting bold new reform of the industry.
Industry consultant and compliance expert Mike Day said: “Section 22 has never been implemented and lettings agents remain outside the definition of estate agents, hence they are not under the same money laundering rules as estate agents.”
He said: “No government in the last 39 years has ever sought to implement Section 22, as they have preferred competition over competency as a benchmark. Many of us do not agree.
“The problem with introducing any licensing or requirement on agents is that you almost certainly have to allow those already inside the tent to stay in, whilst simply stopping new entrants who fail to qualify. This has always been seen as anti-competitive.”
Day said it was also unclear who would need to be qualified – for example, part-time negotiators or business owners. He said if business owners had be qualified, theoretically they might be forced to shut up shop.
But he said: “I just can’t see it happening.”
Never enacted: this is what Section 22 of the Estate Agents Act 1979 says:
Standards of competence.
(1)The Secretary of State may by regulations made by statutory instrument make provision for ensuring that persons engaged in estate agency work satisfy minimum standards of competence.
(2)If the Secretary of State exercises his power to make regulations under subsection (1) above, he shall in the regulations prescribe a degree of practical experience which is to be taken as evidence of competence and, without prejudice to the generality of subsection (1) above, the regulations may, in addition,—
(a)prescribe professional or academic qualifications which shall also be taken to be evidence of competence;
(b)designate any body of persons as a body which may itself specify professional qualifications the holding of which is to be taken as evidence of competence;
(c)make provision for and in connection with the establishment of a body having power to examine and inquire into the competence of persons engaged or professing to engage in estate agency work; and
(d)delegate to a body established as mentioned in paragraph (c) above powers of the Secretary of State with respect to the matters referred to in paragraph (a) above;
and any reference in the following provisions of this section to a person who has attained the required standard of competence is a reference to a person who has that degree of practical experience which, in accordance with the regulations, is to be taken as evidence of competence or, where the regulations so provide, holds such qualifications or otherwise fulfils such conditions as, in accordance with the regulations, are to be taken to be evidence of competence.
(3)After the day appointed for the coming into force of this subsection,—
(a)no individual may engage in estate agency work on his own account unless he has attained the required standard of competence;
(b)no member of a partnership may engage in estate agency work on the partnership’s behalf unless such number of the partners as may be prescribed have attained the required standard of competence; and
(c)no body corporate or unincorporated association may engage in estate agency work unless such numbers and descriptions of the officers, members or employees as may be prescribed have attained the required standard of competence;
and any person who contravenes this subsection shall be liable on conviction, on indictment or on summary conviction to a fine which, on summary conviction, shall not exceed the statutory maximum.
(4)In subsection (3) above “prescribed” means prescribed by the Secretary of State by order made by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(5)No regulations shall be made under this section unless a draft of them has been laid before Parliament and approved by a resolution of each House.
Sigh…
Good people might leave? If they’re good, they’ll get their qualification. It isn’t hard. If they can’t be bothered, they’re hardly committed to professional standards in a sector responsible for transacting the biggest asset most people will ever own. Harsh? Okay, how many estate agents read the lease of a flat before marketing it? If you don’t, you don’t know what you are selling. How then best advice or CPR compliance?
Look at trends in other sectors. Look at your competition. If you don’t raise standards, your business model will die.
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“It isn’t hard” yes it is. To be meaningful as a basic professional qualification the syllabus will need to include Town and country planning, valuation, construction and structural defects, economics, property law, plus some psychology & sociology. That’s 5, 3 hour exams to study and revise for with a 6th subject to have a good grasp of, according to yesterday’s story to A level standard. Not many people have got 1 A level let alone 6.
I did that lot day release, out of 20 course starters I was the only one to get through it, it was hard work.
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What qualification was that Robert?
thanks
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ISVA part 1 at Exeter College.
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Some people just aren’t good at exams. They can know the material front and back, but nerves and anxiety take over. You also have those who have an excellent memory, but zero interpersonal or social skills. I know which one I would rather deal with.
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I know plenty of doctors that don’t have great interpersonal skills, often surgeons, but I know that I would rather they were qualified. If you aren’t able to pass the exams to do the job you should not be doing the job. The NAEA / NFOPP / ARLA exams do have a lot of material to learn but that’s the whole point! I would like to challenge some of the agents out there to know about Town and Country Planning and board sizes or freeholds and conveyancing etc etc etc – surely a good agent has the background knowledge and isn’t just a good salesperson??
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Very true, but as this job is not life or death, I think it is harsh that someone who has been doing the job for many years may not be able to continue because they aren’t ‘scholarly’. Your basic sales neg/admin does not need to know all of that ins and outs of the T&C planning in order to do their job.
And I passed both my ARLA and NAEA within a week of each other but still couldn’t tell you the ins and out regarding boards and T&C planning act as it is not relevant to the day to day of my job. I have considered retaking my ARLA as it was a long time ago..
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Harsh comment and naive,
so you have taken this test have you?
id like to have sight of it however I have no qualifications per say, I’ve done and passed all the training courses put in front of me and so have many many more out there, I run my business with care, consideration to all and the utmost professional standard, oh and have been doing so for over 30 years.
Dont come it with”can’t be bothered” I take my career very seriously but don’t believe after 30 years I should yield to idiots running our business, if qualifications are a must have then it has to start now with all new comers, you can’t ask people of 5 plus years experience to come back to school but the naea will be licking their lips and rubbing their hands together at the forecast of profits coming their way soon, where will their next jolly, sorry, conference be I wonder.
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“…passed all the training courses put in front of me…”? 30 years experience? Well, you should pass something like the NAEA Tech Award with your eyes shut. (Nope, I’m not from Propertymark 🙂 )
I was there 30 years ago. More than. Different world now. Do you read leases before listing?
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I would have thought there would be a transitional period where the level of experience etc would mean qualification but new starters having to go through the examination process.
Experienced people are essential to the industry and nobody in or outside our profession would want to lose them.
By the same token one of the problems we have is the here today gone tomorrow and doing something totally different last week lot who suddenly one day set themselves up as an estate agent valuing and selling someone’s biggest asset.
No knowledge of property, no second thoughts about misleading someone because no knowledge of CPRs, no concept of acting in the client’s best interest, no idea on money laundering, the list goes on.
All other sectors dealing with high value transactions are regulated, why shouldn’t we? Don’t the public deserve that?
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As far as I have seen, govt has not yet set the bar at what level agents will need to be qualified, so we’re merely speculating at this point. Propertymark Quals L3? L2? Assoc RICS? Y1 of a BSc (Hons) in Real Estate Management via UCEM…?!? It may be some specific qualification yet to be introduced….
Whatever is agreed, surely the principle that an agent should be able to demonstrate a level of competence and knowledge about what they do, and the laws that govern that work, is not too much to ask? And surely its only what the public deserve, if we are supposed to represent a profession.
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Can we just get some perspective on this story please. Mike Day stands to see his business increase as he is a trainer who no doubt be looking to earn off the back of this. Of course he is in favour the same as the useless NAEA and Property Redress Schemes.
Its not the qualifications that are the issue, lets face it how hard can they be!
The issue is the creation of an industry within an industry. The added cost. It is not just a case of take this exam, great you are now an estate agent. How will they police it …. Think about it!
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Now matter how you look at it, now its on the table its likely to arrive sooner or later. Signs of the times, even if it will not make a difference? The main issue for agents is the burden of time and costs and staff reaction … I can think of more than a few who are honest and hard working employees who will up sticks, particularly part-timers which some agents need to rely on, especially at weekends. That will cause issues. It didn’t work with FS, they studied for the qualification (didn’t need to know most of it) and then went back to work as if nothing had happened.
There is already enough rules and regulations covering Estate Agency so what they are saying is, if you get a qualification they can continue to turn a blind eye regulating and somehow the improved knowledge will improve standards. That is solely reliant on “attitude” and where in many cases it will fall down. I’m not adverse to improving standards but we have prisons full of qualified people.
The real motive behind this rethoric is the ability to take the licence (which will follow) away from an agent or employee found doing wrong.
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This is all getting a bit ridiculous!
Realitycheck97 – I agree with you totally.
Robert – I’m not sure what your problem is. I have ISVA part I too and we are not talking about that standard of examination. The Government is looking at the basic NAEA qualification to become an MNAEA as the benchmark, not Fellowship or surveyor status. As I’ve said before, taking these exams will not be a big deal for most people and it is a logical progression the way things have been going.
The reason Part II of The Estate Agents Act was not introduced was because Thatcher came to power immediately after the bill had been drafted by Labour. The Tory government considered Part II too restrictive in the new area of competiton and abolition of restrictive practices so it was put onto the back-burner.
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I think the main issue is that we will have to be MNAEA, which means we will have to pay whatever annual fee they deem ‘fair’ and jump through whatever hoops they decide to put there.
IF it was the case that you take the exam once, then a refresh test every 2 years, with maybe a small annual membership fee to be used soley for the regulation and policing of the Industry, then I think I am right in saying that we would not have an issue with that. However being held over the barrel by someone who can charge what they want as there is no alternative does not sound appealing. Can anyone else say ‘Rightmove’? Except we do actually have a choice about RM…
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If someone having a difference of opinion to your own is a problem I’d respectfully suggest they’re not the one with the problem.
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Qualification inflation hasn’t helped anyone who has a degree. Many graduates are working in retail at the lowest levels, not in jobs they thought they would get.
Qualification shoudn’t be linked to membership of any organisation. I know agents who have the NAEA quals from the 90s/00s but fell our with NAEA/NFOPP and all the rest, refused to pay subs now don’t have any qualifications.
Competence based qualifications are a nonsense and Section 22 knew it. All that is is accreditation of prior learning and it’s what the Labour government did in the 2000s to ‘eradicate illiteracy and innumeracy’ by improving the Basic Skills of the population.
They said 20% of the population could be described as functionally illiterate. What they really meant was that 20% of people didn’t have a GCSE in English and couldn’t pass one or has levels lower than a current 11 year old school child. A pretty wide net and pretty insulting to many of the 20% who work, pay bills, own homes, raise their children and generally live ok.
So, plenty of courses sprang up, govt threw money at it and we showed that most people who came to classes could get to Level 2 by passing multiple choice tests online with 2 hours a week, 30 weeks a year support for only one year. More people with qualifications = success.
So back to Estate Agents. Sales are happening up and down the country with very few bad transactions being the fault of an agent. Govt (pushed by interest groups) say estate agents are unqualified and should be qualified. At this point there are two choices: Accreditation of Prior Learning testing that agents really do know things by a simple multiple choice test = qualified people and success. Or, set the bar higher on a par with conveyancers and surveyors and get rid of a lot of very talented sales people.
Many agents have few or no qualifications from their time at school but are very good estate agents because they are customer focussed sales people by nature. Competence based qualifications can’t measure sales skills, how good you are at dealing with customers, how patient you are when negotiating a sale, how thoughtful you are when selling properties for older and more vulnerable customers.
The historical understanding of the role of a professional is someone who has skills and has shown them to the community thereby gaining their trust and respect.. This reputation has to be upheld by the professional so he or she works hard to keep doing the right thing.
Practically speaking there weren’t enough tutors to meet the supposed learning needs of 20% of the population and there aren’t going to be enough tutors to teach estate agents how to be competent. This will probably mean an online test and the whole thing will be the nonsense I first described and you’ll be able to keep taking it till you pass!
Happy days!
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Also, this is a good read https://capx.co/you-shouldnt-need-a-licence-to-show-someone-round-a-house/
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Hi Guys
Time for the rest of the UK (England) to catch up with Scotland and Wales
https://www.mygov.scot/letting-agent-registration/training-and-qualifications/
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Finally, those of us that have tried so hard to be compliant and do the right thing might get the recognition that we’ve wanted for long enough. I’ve never been great with exams but I’ve always taken the time to research and try to make sure I do things correctly and yet it often feels that colleagues and/or competitors that manage to sidestep or bend the rules to suit somehow get on in this business. I do worry that the cost of some of the qualifications required are going to be difficult for an employer to swallow so it’d probably fall on an employee to pay. I’ve been interested in enhancing my current qualifications and CV heading towards RICS qualifications but every time I’ve tried to get near I’ve found that it’s expensive and the pressure of the day job combined with the time required just puts it out of reach for me, so I’ll be watching with interest to see how this is likely to be implemented.
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I’ve been in the business now for 34 years – both residential & commercial sales, lettings & management. Sadly no qualifications. Please don’t send me back to school!
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