Underwhelming Redress Scheme Sign Up
Significant Proportion Of UK Lettings And Property Managing Agents Still Not Signed Up To Mandatory Redress Schemes
The head of one of the three mandatory property redress schemes in the UK private rental sector insists that a significant proportion of letting agents have yet to sign up, contrary to the recommendations from the UK property industry
The 3 mandatory redress schemes are:
- The Property Ombudsman – http://www.tpos.co.uk
- Property Redress Scheme – theprs.co.uk
- Ombudsman Services – http://www.ombudsman-services.org
Property ombudsman for the Property Redress Scheme, Sean Hooker, says there is some confusion over how many UK lettings and property managing agents have actually signed up to one of the mandatory redress schemes, due to uncertainty over what property service providers should be regarded as a lettings or property managing agents.Mr Hooker said: “The reason for this discrepancy is that the new law has widened the definition of a letting agent and therefore a large number of different and legitimate models of agency are now encapsulated in this legislation. For this reason it may be unwise to regulate for mandatory client money protection. A good example is the growing Rent to Rent market that I believe is captured by this law. We have a complex letting industry. Until we fully understand it, the risk is that regulation will be too simplistic and could end up toothless and without credibility. We should as an industry line up our ducks and build the tool kit for a safe and professional industry. Redress is a vital component of the equation so shout this from the roof tops and make sure it is an unqualified success. The perceived lack of public awareness of the new redress regime was surprising given then there has been a decade of redress options available to landlords and tenants with problems, even though they have only just become mandatory.”
Whilst the majority of lettings agents and property managers provide a good service there are a minority who offer a poor service and engage in unacceptable practices. This requirement will mean that tenants and landlords with agents in the private rented sector will be able to complain to an independent person about the service they have received. Ultimately the requirement to belong to a redress scheme will help weed out bad agents and property managers and drive up standards.
The requirement will be enforced by local authorities who can impose a fine of up to £5,000 where an agent or property manager who should have joined a scheme has not done so, Register here
By definition:
Lettings agency work is categorised as work done by an agent in the course of a business in response to instructions from:
- a private rented sector landlord who wants to find a tenant: or
- a tenant who wants to find a property in the private rented sector.
It applies where the tenancy is an assured tenancy under the Housing Act 1988 (the most common type of tenancy) except where the landlord is a private registered provider of social housing or the tenancy is a long lease.
The intention is that all high street and online letting agents and other organisations, including charities, which carry out lettings agency work in the course of a business will be obliged to belong to an approved redress scheme.
Property management work means things done by a person in the course of a business in response to instructions from another person who wants to arrange services, repairs, maintenance, improvement, or insurance or to deal with any other aspect of the management of residential premises.
For there to be property management work, the premises must consist of, or contain:
- dwelling-house let under a long lease – “long lease” includes leases granted for more than 21 years, leases granted under the right to buy, and shared ownership leases;
- an assured tenancy under the Housing Act 1988; or
- a protected tenancy under the Rent Act 1977.
Property management work would arise where a landlord instructed an agent to manage a house let to a tenant in the private rented sector. It would also arise where one person instructs another to manage a block of flats (often with responsibility for the common areas, corridors, stairwells etc.) that contains flats let under a long lease or let to assured or protected tenants.
The legislation will apply to people who in the course of their business (see below) manage properties, for example, high street and web based agents, agents managing leasehold blocks and other organisations who manage property on behalf of the landlord or freeholder.
Landlords are not explicitly excluded from the requirement but are not generally caught by the definitions given above as they are not acting on instructions from another party.
Rachel Clarke from Geo Property Lettings, based in Manchester, said “Being a part of a redress scheme is useful in the lettings industry as there is a regulatory body working to protect our rights as letting and property management agents well as the statutory rights of the tenant and the landlord, making for a much fairer system.”
All UK letting and property managing agents should sign up to one of the three redress schemes now as it is in their interests to do so. It won’t be long before the courts start granting decisions in favour of the complainants, regardless of facts, just because the agent isn’t part of a redress scheme.
