Government takes more steps to force all letting agents to join redress scheme

The requirement for all letting and managing agents in England to belong to an ombudsman scheme as from next year has come closer.

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Yesterday, the Government set out its measures, saying: “Compulsory redress schemes for these agents will ensure agents can be investigated where they have not been clear about fees or other issues, and will provide a cheaper, easier way to pursue compensation if there is a complaint.”

The draft rules set out the grounds on which complaints could be made. It means that agents must clearly state all fees and charges, and draw these to the attention of clients at the start. Fees must also be proportionate to the level of service provided.

Letting agents must also comply with the Consumer Protection from Unfair Trading Regulations 2008 and take “all reasonable steps” to ensure property descriptions are accurate and not misleading.

In addition, agents must bring to a client’s attention “critical information”, including any repairs or maintenance issues, before a property can be let.

The Department for Communities and Local Government published what will be required of the redress schemes – suggesting that others might be set up, beyond the existing TPO and Ombudsman Services.

The redress schemes will not be able to force letting agents to belong to a code of practice. However, it would be possible for tenants and landlords to complain if there had been non-compliance with a voluntary code.

The draft rules stipulate that schemes must be impartial, properly staffed and by people who understand lettings law, be open to all letting and property management agents in England, and that “membership requirements should not unfairly restrict access to the scheme, eg a compulsory requirement to sign up or comply with a code of practice”.

The redress schemes must also be free to complainants, be easy to access, and provide full data about complaints in their annual reports.

Housing minister Kris Hopkins said: “Private rented homes play an important role in providing flexible accommodation to many hard-working people who either do not want to buy or who are saving up for a deposit.

“Having a redress scheme will provide confidence to both tenants and landlords that any problems with letting agents can be cheaply and swiftly resolved and provides an alternative to the court system.

“The conditions we are publishing set out our view of what needs to be considered in setting up a redress scheme that can give peace of mind to many people living and operating in the private rented sector and in leasehold accommodation.

“Residential leaseholders and freeholders also now have somewhere they can go to resolve the day-to-day management problems that can arise with managing agents, without having to resort to a tribunal or court.

“We aim for schemes to come forward for approval throughout January 2014 and urge agents to join one before it becomes a compulsory requirement.

“The suggested conditions follow the recent publication of a tenants’ charter for the private rented sector, which ensures all tenants know what to expect from their tenancy and, if something goes wrong, where to go for help.

“This includes greater transparency about lettings agents’ fees, helping to stop unreasonable practices and unfair charges, and ensuring would-be tenants know the full costs before they sign up to any contract.”

The redress schemes will need to be approved by the Secretary of State.

The schemes will be able to apply next month, with “a window” for approvals to be made in January.

The order will be debated by both Houses of Parliament and, subject to Parliamentary approval, it is expected to come into force in December.

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