It is now 18 months since it became compulsory for lettings agents to be members of one of the government’s three approved redress schemes.
As sales agents had already been required to be members, this brought the whole industry under the umbrella of redress schemes within England and Wales. The trio of organisations that agents must now join are tasked with handling complaints from tenants, landlords and home buyers or sellers and, ultimately, require their members to pay money back to disgruntled customers, should a judgement go against them.
On a secondary level they are also supposed to help agents improve their conduct in the key areas that drive complaints. These are:
- a lack of transparency about fees for tenants,
- inaccurate property descriptions,
- holding deposit disputes,
- not passing on rent to a landlord,
- inaccurate charging and slow or poor service.
This new, compulsory but ‘regulation lite’ approach has been controversial, if only outside the industry. While agents have heaved a sigh of relief that more red tape has been kept to a minimum, many of the charities and campaigning groups – and in particular Shelter – have been vocal about the lack of regulatory teeth that this approach possesses.
The newest kid on the block to join this triumvirate of provision is the Property Redress Scheme (PRS) which, like the lettings agency memberships rules, is less than two years old.
A large number of agents had joined the voluntary schemes, we were tasked with signing up and supporting those who hadn’t. Sean Hooker, Property Redress Scheme.
It is headed up by Sean Hooker, who before used to work at My Deposits and insurance company Fraser Hamilton.
DID WE NEED A THIRD SCHEME?
“Although a large number of agents had already joined the then two voluntary schemes it was the ones who didn’t want to, or didn’t feel it was necessary to join a scheme who we’ve been tasked with signing up and supporting,” says Sean.
He realised the scope of the problem after the total industry size was compared to those who had joined schemes – and Sean and his colleagues set to tracking them down.
“A number of our agents are smaller ones or start-ups and they arrive into the industry with huge enthusiasm and the desire to have successful businesses. But are not as au-fait with the regulations and their responsibilities as more established agents are.
“So our approach is to work with our members and ensure they adopt best practice, comply with the law and that they are steering their businesses in the right direction.”
ARE THE SCHEMES WORKING?
“Ours is a non-regulated industry and you don’t have to be qualified to set up as a letting agent – you just have to comply with the rules and regulations that are out there,” says Sean.
“So although PRS is part of the equation the enforcement of the law is down to the local authorities including Trading Standards and the local housing teams.
“The responsibility for raising standards is a more collective, ‘carrot and stick’ approach and according to the government is designed not to overburdening the industry with more red tape.
“The local authorities are the stick and organisations like PRS, The Property Ombudsman and Ombudsman Services: Property are the carrots. On the other hand, we do all have powers to make awards of up to £25,000. But I can’t close a company down or fine them in the same way a local authority can do.”
Sean says he often says to agents who are setting up businesses that compliance is just as important as the commercial aspects but that he realises the pressure of getting a business off the ground.
“But the regulations are going to get tougher because the latest legislation within the Housing and Planning Bill is about to rolled out,” says Sean.
“I can reveal too that the Department of Communities and Local Government is going to start taking a much more joined up approach to industry and has drawn the redress schemes into this new approach – which I guess you could say is more holistic.”
IS AGENTS’ BEHAVIOUR IMPROVING?
“The feedback we’re getting is that, as well as the financial awards and conciliation side of what we do at the very minimum our information, advice and support is changing how our members organise themselves,” says Sean. “But if they persist in bad practices then we will be in contact.”
HOW MANY ATTRACT COMPLAINTS?
“We currently have just under 5,000 branches on our membership list,” says Sean. “Of those, approximately 300 have been complained about and 100 of those have been progressed to a formal decision.
“The number of agents who have then ignored our decision and flouted the whole process numbers about a dozen.
Compliance regulations are going to get tougher when the latest legislation within the Housing and Planning Act is rolled out.
“We’re trying to make these members understand that this a compulsory scheme and they can’t just disregard us. Our final sanction is to expel them from the scheme and then report that to both their local authority and the other two schemes and national Trading Standards.
“We try and give them every opportunity to comply but we do have this sanction and we also name and shame via the media too.”
CAN SALES AGENTS JOIN TOO?
“We don’t distinguish between the different kinds of business joins us, and we make it clear to them when they join that our scheme covers both sides of the industry. They can be operating in all three sides of the industry – if you include property management too,” he says.
YOU SAY YOU’RE THE ‘EASY TO USE OPTION’ – WHY?
“We say that because we offer agents an online application and in general we’re trying to put as few barriers as possible to joining in front of them” says Sean.
“Eighteen months ago the government said letting agents must join a scheme but the two other schemes were voluntary until that point – and therefore they had a lot more criteria for joining up. So we wanted ours to make it much easier for agents to comply with the law and join a redress scheme.”
DO THE THREE REDRESS SCHEMES WORK TOGETHER?
“We have a memorandum of understanding with the two other organisations so that if we expel someone from our scheme, the others will know about it and prevent the agent from sneaking back in’,” says Sean.
He says they also have a compliance offer who checks each membership application to ensure nothing fishy is going on.
“For example, we check that the directors of the agency applying to join us haven’t already been expelled.
“We also have someone who checks that agents are compliant with other legislation – for example, letting fee transparency, and who does branch visit to back this up.”
The Negotiator randomly picked a hundred agents from England and Wales including those from London, Leeds, Manchester, Birmingham and Norwich in order to give a snapshot of the state of play for the redress schemes.
Half of the agents we looked at were not advertising which redress schemes they were members of – something the PRS and others ask its members to do – while two of the agents made it almost impossible to tell, mainly because they had displayed The Property Ombudsman (TPO’s) logo very small on a dark background.
The redress scheme with the greatest membership was the TPO with 78 per cent of all the agents we looked at followed by Ombudsman Property with 12 per cent and the Property Redress Scheme with four per cent. This reflects the national picture. The remaining six per cent of the agents could not be found on any of the three redress scheme’s online databases, which is surprising given that it has been compulsory for sales and lettings agents to be a member for at least 18 months now.
Top complaint types
- Surveys/valuations 33 per cent
- Property management/landlord 14 per cent
- Sales agent 8 per cent
- Financial 54 per cent
- Financial and non-financial 33 per cent
- Non-financial 13 per cent
*Ombudsman Services data