The Letting Agent/Property Managers Redress Scheme

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:

  • A private rented sector landlord who wants to find a tenant: or
  • A tenant who wants to find a property in the private rented sector. It applies where the tenancy is an assured tenancy under the Housing Act 1988 (the most common type of tenancy) except where the landlord is a private registered provider of social housing or the tenancy is a long lease. Lettings agency work does not include the following things when done by a person who only does these things:
  • Publishing advertisements or providing information;
  • Providing a way for landlords or tenants to make direct contact with each other in response to an advertisement or information provided;
  • Providing a way for landlords or tenants to continue to communicate directly with each other. It also does not include things done by a local authority, for example, where the authority helps people to find tenancies in the private rented sector because a local authority is already a member of the Housing Ombudsman Scheme. The intention is that all “high street” and web based letting agents, and other organisations, including charities, which carry out lettings agency work in the course of a business will be subject to the duty to belong to an approved redress scheme. Employers who find homes for their employers or contractors; higher and further education authorities and legal professionals are excluded from the requirement.

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:

  • Someone looking after the letting or management of a rented property or properties on behalf of a family member or friend who owns the property/properties, where the person is helping out and doesn’t get paid or only gets a thank you gift;
  • A friend who helps a landlord with the maintenance or decoration of their rented properties on an ad hoc basis;
  • A person who works as a handyman or decorator who is employed by a landlord to repair or decorate their rented property or properties when needed; 8
  • A landlord who looks after another landlord’s property or properties whilst they are away and doesn’t get paid for it;
  • A joint landlord who manages the property or properties on behalf of the other joint landlords Whilst it is not possible to cover all eventualities in this note one of the key issues to consider when deciding what could be considered an ‘informal arrangement’ is whether the person doing the letting or property management work is helping out an individual as opposed to offering their services to anyone who wants to use and pay for them.

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.

  • What happens if I do not join when I should?

If you continue to act in any of the capacities above without belonging to an approved redress scheme, you may be liable to:

  • A fine of up to £5,000 (for lettings agency work or property management work in England)
  • A fine of £1,000 and the potential for a formal warning or prohibition order (for estate agency work in the UK)

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