Redress scheme shake-up: letting agents – are you trading illegally?
On 7 August, in a long-anticipated move, Ombudsman Services: Property withdrew from the housing market. The service offered redress for consumers of property agents, for whom it is a mandatory requirement for legal trade.
With the Ombudsman Services pulling out of the sector, two authorised schemes remain: The Property Ombudsman and the Property Redress Scheme. Both provide independent support to landlords and tenants who are dissatisfied with how they were treated by their letting agent.
The redress schemes work as an alternative to court action. If a consumer is unhappy with their letting agent’s service, they can file a complaint to the scheme, which will attempt to resolve the issue.
If the scheme fails to settle the dispute it will make a finding and, if they conclude the agent to be at fault, can award the claimant up to £25,000. Rewards are not always financial, however; a scheme may order the letting agent to issue a formal apology or explanation to the landlord or tenant.
What do the changes mean for letting agents?
All letting agents must be part of one of the remaining two schemes. If they aren’t, they are ultimately trading illegally and face a fine of £5,000. If a letting agent was formally signed up to Ombudsman Services: Property, therefore, it should have already moved to another scheme.
Agents registered with Ombudsman Services: Property were forewarned they would have to register with another scheme. Still, numerous letting agents were found to have not made the switch by the date of the deadline, with Ombudsman Services stating it would send names to regulator, the National Trading Standards Estate Agency Team (NTSEAT), for further investigation.
Last week, James Munro of NTSEAT said the body was “working with local Trading Standards and housing teams along with the Ministry of Housing, Communities and Local Government to ensure that estate agents have switched to valid redress schemes.”
Two weeks before the deadline, around 450 agents were yet to make the move. Nicole Granite, ombudsman at Ombudsman Services, said her company had contacted its agents on many occasions as part a comprehensive communications and awareness initiative.
She said many agents had successfully signed up with another scheme in what she called a “smooth transition.” Yet, she added: “It’s possible that a small number of companies may have missed the deadline.
“If your company falls into this category, our advice would be to register as soon as possible with either The Property Ombudsman or the Property Redress Scheme.”
Recent figures from the Property Redress Scheme revealed 1,750 new members had signed up. A statement from the scheme said it witnessed “a huge rise in complaint notifications last year – as stated in the PRS Annual Report 2017 – and is continuing in its responsibility to the property sector to offer free and fair redress to consumers.”
‘Patchwork’ property redress market is failing agents and consumers
Delivering a parting blow, Ombudsman Services: Property slammed the current redress scheme, hailing it a “baffling patchwork” and calling on the government to enforce a single ombudsman for the entire industry.
Matthew Vickers, chief ombudsman designate for the scheme, said: “Redress in the housing sector is far too complex, with overlaps and gaps that make it virtually impossible for consumers to get complaints resolved.”
He called the system “fragmented, complicated and ineffective” and stressed that consumers deserve better.
“By following the model used in energy, where strong regulation is backed up by a single ombudsman and effective advocacy, redress in housing could be transformed for the better.
“Our research shows that the vast majority of the public support this approach.”
Earlier this year saw a proposal put forward during a Ministry of Housing consultation for a single ombudsman which would cover everything from private to social housing, to builders and new homes. Yet, while the government appears to be supportive of the idea, the Property Ombudsman has rejected it.
Partner with Stride
If you haven’t already, registering with another property redress scheme should be your top priority – or else you’re risking a hefty fine.
After this, or if you’ve already signed up with another scheme, you should consider partnering with the insurance experts at Stride. We can help you to develop a new income stream through our range of specialist cover for landlords and tenants.
We’ll work hand in hand with you to provide your customers with quality cover, ultimately helping you to improve your reputation, boost your credibility and expand your business. Find out more about this service today.