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Government approves three property redress schemes

Three compulsory redress schemes have been approved by the Government to offer independent investigation of complaints in the lettings sector, bringing it into line with the world of residential sales.

The schemes are: The Property Ombudsman, Ombudsman Services Property and The Property Redress Scheme.

The first two are already operational but little is known about the new Property Redress Scheme.

The three schemes will consider issues of hidden fees and poor service, and as with the sales system now where a complaint is upheld, tenants, landlords and leaseholders could receive compensation.

The majority of letting agents are already signed up with one of the three organisations but the remaining 3,000 agents – 40% of the entire industry – will now be encouraged to join ahead of membership becoming mandatory later this year.

The Property Ombudsman is arguably the more recognised of the two existing schemes.

“The Property Ombudsman experienced a 34.2% increase in consumer enquiries relating to letting agents not registered with TPO during 2013, which really underlines the importance of mandatory redress” said TPO Ombudsman Christopher Hamer.

“Whilst my role as Ombudsman means that I am not a regulator and I can only review complaints after a dispute has occurred, making redress a legal requirement for lettings is a positive move. Clearly it would be better if complaints did not arise in the first place and robust legislation to enforce controls was in place."

Housing Minister Kris Hopkins said the new rules would strike the right balance between protecting tenants and not harming the industry with excessive red tape, and were just one part of the government’s efforts to secure a better deal for tenants in the private rented sector.

“All tenants and leaseholders have a right to fair and transparent treatment from their letting agent. Most are happy with the service they receive, but a small minority of agents are ripping people off, and giving the whole industry a bad name,” he said, “That’s why we will require all agents to belong to one of the official redress schemes. They will ensure tenants have a straightforward route to take action if they get a poor deal, while avoiding excessive red tape that would push up rents and reduce choice for tenants.”

George Spencer, chief executive officer of lettings agent Rentify, said: “It is excellent news that the Government is finally acting to clean up the lettings industry and it makes sense that agents who aren't members of redress schemes will have to join the Property Ombudsman, the Ombudsman Services or the Property Redress Scheme. There are many decent letting agents out there but also a substantial rogue contingent that lack transparency on fees and are fleecing both tenants and landlords alike. At the very least, tenants and landlords should ensure their agent is ARLA and UKALA-registered but many people simply don't know that they are leaving themselves exposed if this is not the case.”

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