Following years of reports in the media about ‘ripped off’ landlords who have fallen foul of unscrupulous lettings agent the government took action to police what has been, for a very long time, a largely unregulated market.
Since October 1st 2014 lettings agents must be a member of one of three government-approved redress schemes all of which set out the ‘fair and transparent’ services a good lettings agent should offer and enable landlords to seek redress should their agent’s service fall short of the expected quality.
The three schemes are: The Property Ombudsman (a not-for-profit scheme that is the most established and can trace its beginnings back to 1990, Upad are a member); the Ombudsman Services Property (also not for profit which offers dispute resolution services across several industries including property) and The Property Redress Scheme (owned by an insurance firm that also operates the ‘my deposits’ scheme).
All lettings agents and property management companies must now be registered with one of these three schemes and, if they are not, are committing a criminal offence and face a fixed penalty of £5,000 issued by their local authority. Enforcement has been patchy though and in London, for example, only the borough of Newham has been enthusiastically enforcing the new rules, issuing to at least nine unregistered agents.
The sector in Wales is also highly regulated with all landlords and agents managing property needing to be licensed under laws there. The Rent Smart Wales scheme sets out the minimum criteria for a letting agent, which includes their having professional indemnity insurance in place so the landlord can be compensated should their agent be negligent. They must also have a membership of a consumer redress scheme and the two approved schemes for Wales are the Property Redress Scheme and The Property Ombudsman.
Each of the redress schemes require letting agents to comply with a suite of minimum standards. These are designed to prevent many of the unscrupulous practices that have made the headlines. These include hidden fees to tenants; not passing on rent to landlords; incorrectly conducting evictions; charging excessively high referencing and administration fees, double charging both landlords and tenants for the same service (such as tenancy renewals) and poor property management.
For example, the Property Ombudsman’s Code of Practice highlights how agents must keep records of their relationships with a landlord for six years; disclose any conflicts of interest to all parties; tell landlords unprompted which of the redress schemes they have joined and offer accurate recommended rents to landlords.
So how do you complain? All three schemes give you and your letting agent eight weeks to sort the complaint out and then, if it has not been resolved, they then get involved. After that each of the schemes will then investigate the claim and, if they find in your favour, make an enforceable financial award.
The different schemes also make it clear the circumstances under which a complaint can be said to be valid. The Property Ombudsman, like the others, states that a complaint may be valid if an agent has infringed a landlord or tenant’s legal rights; failed to follow TPO’s code of practice; treated you unfairly; or has been guilty of maladministration.
To find out more about each of the redress schemes visit:The Property Ombudsman http://www.tpos.co.uk/index.htm Property Redress Scheme https://www.theprs.co.uk/ Ombudsman Services Property http://www.ombudsman-services.org/property.html
This is an area that’s been a cause of concern for several years because should a letting agent go bust or they misappropriate a landlord’s money then the landlord will receive compensation under a Client Money Protection scheme.
Currently, letting agents sign up voluntarily to a CMP scheme and the new compulsory client money protection legislation will bring peace of mind to investors and landlords alike. The new CMP rules in England will come into effect from 1 April 2019.