Redress Schemes for Managing and Letting Agents

A person who engages in "lettings agency work" or "property management work" must be a member of a redress scheme for dealing with complaints in connection with that work.

There are three schemes which have received approval under the above provisions:

• Property Redress Scheme
• The Property Ombudsman

Lettings agency work

Lettings agency work is defined as:

Any person does things in the course of a business in response to instructions received from:

• a person seeking to find another person wishing to rent a dwelling-house in England under a domestic tenancy and, having found such a person, to grant such a tenancy ("a prospective landlord");
• a person seeking to find a dwelling-house in England to rent under a domestic tenancy and, having found such a dwelling-house, to obtain such a tenancy of it ("a prospective tenant").

However, "lettings agency work" does not include any of the following things when done by a person who does no other things falling within the above:

• publishing advertisements or disseminating information;
• providing a means by which:
• a prospective landlord or a prospective tenant can, in response to an advertisement or dissemination of information, make direct contact with a prospective tenant or (as the case may be) prospective landlord;
• a prospective landlord and a prospective tenant can continue communicating directly.

"Domestic tenancy" means:

• an assured tenancy for the Housing Act 1988 (except where the landlord is a provider of social housing or the term is for longer than 21 years, and a few other similar exceptions)
• any other tenancy as may be specified by the order.

Property management work

"Property Management work" is defined as:

• things are done by any person ("A") in the course of a business in response to instructions received from another person ("C") where:
• C wishes A to arrange services, repairs, maintenance, improvements or insurance or to deal with any other aspect of the management of premises in England on C's behalf, and
• the premises consist of or include a dwelling-house let under any of the following tenancies:
• an assured tenancy under the Housing Act 1988;
• a regulated tenancy for the Rent Act 1977;
• a long lease (for which see section 7 Leasehold Reform, Housing and Urban Development Act 1993) other than one to which Part 2 of the Landlord and Tenant Act 1954 applies;
• any other tenancy as may be specified by the order.

Rules of the scheme

Each scheme has its own rules, but they are all similar.

For example, the Property Redress Scheme requires the member to provide all consumers with a copy of their internal complaints procedures (if any) and information about the redress scheme when signing any agreement AND at the point of any formal complaint received.

They require the complainant to contact the agent to try to resolve the complaint without going into the scheme. But if there is no success, the scheme will consider the complaint and decide accordingly.

The scheme can award monetary penalties and require an apology or other practical action to mitigate any detriment. There are powers to award payments for distress or an amount "in recognition of time and trouble taken to make the complaint".

If a member fails to comply with the scheme's decision after notification, the member can ultimately be suspended and terminated. That information will be publicised to the relevant body if suspended or terminated. If a membership is terminated (and fails to join some other scheme) and continues with letting or management work, that person will be in breach of the legislation and deemed to have failed to join a scheme.

The member can rejoin a scheme but only after full payment of all penalties, compliance with the decision and repaying the membership at double the standard amount of its class.

Enforcement and penalties

The enforcing authority is the local authority. If a person has failed to join a redress scheme (on the balance of probabilities), a penalty notice for up to £5,000 may be served.
Where a penalty notice has been served, the person may, in the first instance, make written representations within 28 days of the penalty notice, after which an appeal to the First-tier Tribunal is available.

The authority may use any sums received by the local authority concerning penalties for any of its functions (which it is submitted will have the effect that they will be keen to issue penalty notices).