This week saw the implementation of new rules which mean all letting agents and property management agents in England need to be a member of an approved redress scheme.
From 1 October all agents must join one of three schemes - the Property Ombudsman, the Property Redress Scheme or Ombudsman Services Property.
Commenting on this legal obligation, David Cox, managing director of Association of Residential Letting Agents (ARLA), said: "We welcome the introduction of compulsory redress. The industry needs regulating and this is the first step towards that. As a matter of course, letting agents hold money on behalf of the tenant and landlord but depending on the agent you choose, you could stand to lose your money as not all are covered by client money protection.
“ARLA is calling for all agents to have client money protection, which in many ways is similar to the Financial Services Compensation Scheme. For example, with ARLA Licensed agents, in the unlikely event a member goes bust or misappropriates a client’s funds we can cover losses for both the landlord and tenants."
However, campaign group Generation Rent was not impressed with the new regulations.
“This is a vague and bureaucratic response to the shoddy service and exploitative practices of some letting agents,” said Alex Hilton, director of Generation Rent, “Trading standards departments in local councils are already empowered to clamp down on offending firms – they just don’t have the funding to do their jobs.”
Meanwhile The Property Ombudsman released figures this week which saw a sharp increase in the number of consumer complaints about the private rental sector.
The figures, published in The Property Ombudsman’s 2014 interim report, reveal that 1,187 complaints were resolved in total about both sales and lettings issues between 1 January and 30 June this year with 721 complaints (61%) made against letting agents – that’s a 37% increase on the same period last year.
The Property Ombudsman upheld 74% of the complaints made by landlords and tenants against letting agents. TPO Christopher Hamer says his is now the largest redress scheme with 11,744 lettings offices.
Complaints against both sales and lettings agents rose by 37% overall with 1,187 cases reviewed, of which 721 were against letting agents and 544 were against sales agents – the latter figure indicating a 42% rise.
Hamer says: “At August 1 over 13,200 sales offices and 11,600 letting offices were registered with TPO. We estimate that these figures represent 95% of sales agents and 65% of lettings agents operating within the UK.”