From 1st October 2014 letting agents (high street and web-based) became legally bound to become a member of one of three redress schemes, known collectively as Ombudsman Schemes. As of 2018, the Ministry of Housing, Communities and Local Government issued new guidance to update that of 2014 as a reminder that there are only two such schemes in operation as the Ombudsmand Services Property announced its withdrawal from complaints handling in the property sectors by press release on 6th February 2018.
The two remaining schemes are:
The requirements will be enforced by local authorities who can impose a fine of up to £5,000 where an agent or property manager who should have joined a scheme has not done so. It can also issue a fine of £1,000 and the potential for a formal warning or prohibition order.
This 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.
PROPERTY MANAGEMENT WORK
With regard to resident management companies, (companies established by leaseholders) where they own the freehold and self-manage there is no such requirement to join an Ombudsman scheme. Under legal definition, property management work means things done by a person (or persons) in response to instructions from another person (or persons) who wants to arrange services, repairs, maintenance, improvement, or insurance or to deal with any other aspect of the management of residential premises. Here, the freeholder and the management company are the same.
Where a resident management company does not own the freehold and self-manages (rather than using a managing agent), this would also be excluded as the work is only in respect of their own premises and would not be operating in the normal course of business.
LETTINGS AGENCY WORK
This is work carried out by an agency responding to instructions from either a PRS landlord who wants to find a tenant or a tenant who wants to find a property in the PRS.
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.
It does not include where only the following work is carried out:
- 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
It also does not include things carried out by a local authority such as where it helps people to find tenancies in the PRS because it is already a member of the Housing Ombudsman Scheme.