From 1 October 2014 new legislation was introduced for all lettings agents and property managers in England to join one of two Government-approved redress schemes.
The reason for the new legislation was because although a majority of lettings agents and property managers provide a good service but there are a minority who continue to offer a poor service. The requirement to join the redress scheme means that tenants and landlords with agents in the private rented sector and leaseholders and freeholders dealing with property managers in the residential sector will be able to complain to an independent person about the service they have received.
Failure to join the scheme can lead to a monetary fine imposed by the local authority. Our frequently asked questions will help you understand, If you need to register and How to register.
Do I need to join the scheme?
All Property Agents that carry out Estate, Lettings and Property Management Work, as defined by legislation, must join a government authorised consumer redress scheme.
What do we mean by ‘lettings agency work’? ‘Lettings agency work’ is things done by an agent in the course of a business (see below) in response to instructions from:
Property management work means things done by a person in the course of a business (see below) in response to instructions from another person who wants to arrange services, repairs, maintenance, improvement, or insurance or to deal with any other aspect of the management of residential premises. However, it does not include things done by, amongst others, registered providers of social housing, that is, housing associations and local authorities who are social landlords, as these organisations are already required to belong to the Housing Ombudsman Scheme. For there to be property management work, the premises must consist of, or contain:
a) a dwelling-house let under a long lease - “long lease” includes leases granted for more than 21 years, leases granted under the right to buy, and shared ownership leases;
b) an assured tenancy under the Housing Act 1988;
c) a protected tenancy under the Rent Act 1977. Property management work would arise where a landlord instructed an agent to manage a house let to a tenant in the private rented sector. It would also arise where one person instructs another to manage a block of flats (often with responsibility for the common areas, corridors, stairwells etc.) that contains flats let under a long lease or let to assured or protected tenants. The legislation will apply to people who in the course of their business manage properties, for example, high street and web based agents, agents managing leasehold blocks and other organisations who manage property on behalf of the landlord or freeholder. The requirement to belong to a redress scheme does not apply to Managers of common hold land, student accommodation and refuge homes; receivers and insolvency practitioners; authorities where Part 3 of the Local Government Act 1974 applies; right to manage companies; legal professionals and property managers instructed by local authorities and social landlords. What do we mean by ‘in the course of business’? The requirement to belong to a redress scheme only applies to agents carrying out lettings or property management work ‘in the course of business’. The requirement will therefore not apply to ‘informal’ arrangements where a person is helping out rather than being paid for a role which is their usual line of work. Some examples of ‘informal arrangements’ which would not come under the definition of ‘in the course of business’ are set out below:
Does the requirement apply to landlords?
Landlords are not explicitly excluded from the requirement but are not generally caught by the definitions given above as they are not acting on instructions from another party.
What are the redress schemes?
The two schemes as of 7 August 2018 are:
Property Redress Scheme (www.theprs.co.uk)
The Property Ombudsman (www.tpos.co.uk)
How does a lettings agent or property manager join one of the schemes?
Joining any of the two schemes involves a simple application process which can be done online. Paper application forms are also available where needed. More information about the membership requirements, joining instructions and fees can be found on each of the scheme websites, given above.
If you continue to act in any of the capacities above without belonging to an approved redress scheme, you may be liable to:
Possible revocation of your licence (for lettings agency work or property management work in Wales)
For further information visit Registering with a redress scheme as a property agent.