Redress Scheme - Private Rentals

housing, landlord, tenant
Jul 09 | 2021

Mandatory Redress Scheme - Private Rental Sector

The government’s housing minister last week warned landlords of an imminent, mandatory redress scheme.   A redress scheme is an independent body that seeks to resolve issues made by consumers about members of the scheme. In England, a property redress scheme is already in place which requires both Property Managers and Agents to be a member; provided either by The Property Redress Scheme or the Property Ombudsman. A similar scheme is in place in Wales through Rent Smart Wales, requiring either a license, registration or both for agents, property managers and private landlords. The basis of the scheme is to offer a cheaper, more accessible means for resolving disputes without the need for litigation. Members of the scheme face the threat of paying compensation to complainants, or even expulsion from the scheme if they fail to pay their fines.   Private landlords in England remain exempt from the Letting Agency Work and Property Management Work (Approval and Designation of Schemes) (England) Order 2013 which made membership mandatory and although the scheme is open to private landlords, few have joined. Further, it is only commercial landlords who require membership to the Property Redress Scheme in Wales.   The then Communities Secretary, James Brockenshire first announced a mandatory membership for private landlords in January 2019, but no detailed proposals have been published, nor any legislation into force since, but a clue to its introduction came in the Queen’s Speech in December 2019. The briefing notes highlighted that one of the benefits of the Renters Reform Bill would be ‘… all tenants having a right to redress if their rented properties are not safe and healthy’. Later in March 2020, Robert Jenrick, Housing Secretary, confirmed during a speech in the House of Commons that the government would set up a mechanism for ‘leaseholders to seek proper redress for their genuine grievances’. Again, in March this year, the topic was ignited once more when he stated in his speech at the National Housing Federation Summit that ‘tenants should be able to seek redress in reasonable time without an uphill struggle and know that they will be heard’. After a long conversation around the subject, the confirmation of a mandatory membership for private landlords came by way of Lord Greenhalgh, the governments’ housing minister in June of this year.   The introduction of a mandatory scheme would mean that the whole private rental sector would be accountable to a complaint process. Currently, approximately half of all landlords use a letting agent, but this legislation would mean that all DIY landlords would be subject to the same redress obligations. Greenhalgh believes that tenants with a legitimate complaint about their home will have access  to a more straight-forward, available resolution, while landlords will have a clearer understanding of their obligations. Sean Hooker, Head of Redress at the Property Redress Scheme believes that a mandatory scheme is long-overdue and that a single gateway for tenants to access complaint services would mean that ‘complainants would be able have their complaint signposted to the right service, that data could be shared allowing the complaint to be effectively dealt with as quickly and effectively as possible.’   But sceptics believe it will fall short of the ‘fix’ it aims to be. Social landlords already have a redress scheme, the Housing Ombudsman Scheme, and that does not eliminate poor practice. Further, there are many thorny crossovers that would need to be ironed out before any legislation came into force. If a property is managed by an agent, does the landlord need membership to a scheme too? If the landlord and agent are members of different schemes, which redress route would a tenant have to take? Would a redress scheme force unscrupulous landlords further under the radar? Would the absence of a registration prevent an eviction?   In the face of recent investigations, such as Daniel Hewitt’s report into moldy and poorly maintained homes, this reform deserves attention. An accessible scheme which holds all landlords to account and promises to be more effective then schemes currently in place will be more important than people may realise. The whole private rental sector could be facing an overdue, vigorous shake up. Please contact our Landlord and Tenant team to discuss any queries you may have on 0330 123 1131   Louise McGowan - Graduate Solicitor - Property Litigation
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