Compulsory redress scheme for agents

Since the Julie Rugg report into the private rented sector, published in 2008, there have been calls for further regulation in the sector. A step on the road to this is the compulsory joining of a redress scheme for letting agents, due to come into force from October 2014; though the complaints about agents from landlords are as frequent as complaints by tenants, whether this will be equally in favour of both sides is yet to be seen.

Compulsory redress scheme for agents Residential Landlord

Many landlords feel they do not get the services they pay for and that the tenants are being poorly served as well.

DCLG have sought to address tenant complaints by announcing an amendment to the Enterprise and Regulatory Reform Act, 3 Letting Agent redress schemes, which it believes will protect tenants by providing a simple and effective route to obtain resolution or compensation if they are getting poor service from an agent.

As always, Government have gone for the biggest hammer to crack a very small nut, with the hammer hitting far more than the target.
The legislation will hit everyone engaged in letting on behalf of someone else. Many good landlords who manage their own properties well, will be asked to act as agents for friends with a few properties but without the confidence or the time to manage them themselves. Those landlords will now be expected to join one of the 3 redress schemes.

These are:

The Property Ombudsman – there will be a £20 joining fee, then an annual membership of £228 (including VAT);

Ombudsman Services Property – the charge is £294, including VAT, per office;

The Property Redress Scheme charges £95 plus VAT per application and £95 plus VAT per branch.

There is a further charge for complaints of £60 plus VAT for agent members and £90 plus VAT for others.

The schemes describe their charges as modest; they could still be enough to make some very small landlord agents baulk – are there penalties for failure to comply? Yes, and they can seem quite extreme.

Fines of up to £5,000 can be imposed by local authorities and will continue to do so until the landlord proves he has joined a scheme. Trading standards can also order that the agent ceases trading. A scheme can award up to £25,000 after membership, which is binding on the agent. Expulsion from the scheme is the biggest deterrent, as details of expelled members will be shared with the other schemes, as the schemes have an agreement that expulsion from one scheme means exclusion from joining another – and that means unable to trade, legally.

This will not be introduced as a sole measure to improve the lot of tenants; other measures include:

Tenants will know what to expect from a voluntary code of practice setting property management standards.

There’s a help to rent guide, so tenants understand what an agreement to rent means.

There’ll be a new model tenancy agreement for longer tenancies.

Additional guidance for councils on dealing with rogue landlords and protecting tenants from illegal eviction.

There’ll be an on-going review to look at further improvements in the private rented sector.

Landlords who act as agents, whether for one property or several, must be registered with a scheme. Check the websites of the schemes but make sure you join a scheme if you are helping anyone by letting their properties – tell them they’ve got to pay!

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