Property Redress and the law
You must join a redress scheme if you’re:
· an estate agent dealing with residential properties in the UK
· a letting agent or property manager in England or Wales
For all UK estate agents, we are authorised by the National Trading Standards Estate and Lettings Agency Team, to offer redress to consumers under the Consumers, Estate Agents and Redress Act 2007: Part 3.
For lettings and property management agents in England, we are authorised by the Ministry for Housing, Communities and Local Government (MHCLG), to offer consumer redress under the Government’s designation of redress schemes regulations in 2013.
You can read our guidance for lettings and property managers here and the legislation is available here.
The Estate Agents Act 1979 defines
"Estate agency work" includes work carried out by any person in the course of a business (including employees) following instructions received from a customer who wishes to buy or sell an interest in land:
(a) for the aim and purpose of introducing the customer to a third person who wishes to buy or sell an interest in land, and
(b) following that introduction in the course of that business, has the aim of securing the purchase or sale of that interest
Exceptions include work carried out by solicitors, credit brokers, surveyors or those carrying out property valuations.
"Lettings agency work" is all things done by an agent in the course of a business in response to instructions from:
· a private rented sector landlord who wants to find a tenant, or
· a tenant who wants to find a property in the private rented sector
It applies to assured tenancies 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
Lettings agency work excludes the following where a person only:
· publishes advertisements or provides information
· provides a way for landlords or tenants to make direct contact with each other in response to an advertisement or information provided
· provides a way for landlords or tenants to continue to communicate directly with each other
The intention is that all "high street” and web based letting agents, and other organisations, including charities, which carry out letting agency work in the course of business must belong to an approved redress scheme.
The exceptions include:
· things done by a local authority, for example, where the authority helps people to find tenancies in the private rented sector because a local authority is already a member of the Housing Ombudsman Scheme
· employers who find homes for their employers or contractors
· higher and further education authorities
· legal professionals are excluded from the requirement
"Property management work" means things done by a person in the course of a business, in response to instructions from another person who wants to arrange services, repairs, maintenance, improvement, or insurance or to deal with any other aspect of the management of residential premises.
Exclusions include amongst other things done by registered social housing providers - housing associations and local authorities who are social landlords, as these organisations are already required to belong to the Housing Ombudsman Scheme
For there to be propertymanagement work, the premises must consist of, or contain:
· 7 a) a dwelling-house let under a long lease - “long lease” includes leases granted for more than 21 years, leases granted under the right to buy, and shared ownership leases
· b) an assured tenancy under the Housing Act 1988; or
· c) a protected tenancy under the Rent Act 1977
Property management work would arise where:
· a landlord or other person instructed an agent to manage house let to a tenant in the private rented sector
· one person instructs another to manage a block of flats (often with responsibility for the common areas, corridors, stairwells etc.) that contains flats let under a long lease or let to assured or protected tenants
The law applies to people who manage properties, in the course of their business, such as high street and web-based agents, agents managing leasehold blocks and other organisations who manage property on behalf of the landlord or freeholder.
The requirement to belong to a redress scheme excludes:
· managers of commonhold land
· student accommodation and refuge homes
· receivers and insolvency practitioners
· authorities where Part 3 of the Local Government Act1974 applies
· right to manage companies
· legal professionals and property managers instructed by local authorities
· social landlords.
More information and FAQ scan be found here.
‘In the course of business’ or ‘informal arrangement’?
Agents carrying out lettings or property management work and being paid for a role which is their usual line of work are acting ‘in the course of business’ and must belong to a redress scheme.
‘Informal arrangements’ which would not come under the definition of ‘in the course of business’ will include:
· someone looking after the letting or management of a rented property or properties for a family member or friend who owns the property/properties, where the person is helping out and only gets a thank you gift, and no payment
· a friend who helps a landlord with maintenance or decoration of their rented properties whenever necessary
· a person who works as handyman or decorator, employed by a landlord to repair or decorate their rented property or properties, when required
· a landlord who looks after another landlord’s property or properties while they are away free of charge
· a joint landlord who manages the property or properties on behalf of the other joint landlords
While it is impossible to cover all eventualities, one of the key issues to consider whether the situation is just an ‘informal arrangement’ is whether the person doing the letting or property management work is helping an individual out, as opposed to offering their services to anyone who wants to use and pay for them.
What happens if I do not join Property Redress?
In England, a letting agent or property management agent who does not join an approved consumer redress scheme can be fined up to £5,000 by the local authority and ultimately closed down, if they continue to operate illegally.
In Wales, all letting agents and landlords are required to register with Rent Smart Wales. Part of the licensing application requirements is to provide proof they belong to a redress scheme, have purchased professional indemnity insurance, and can offer their landlords and tenants client money protection. The penalty for someone operating illegally can be either a fine or prosecution, as well as having their licence revoked if one was previously issued.
In the UK, estate agents who continue to work without being a consumer redress member may be fined £1000 with the potential to receive a formal warning or be forced to close the business.
The UK government has announced that private landlords in England are likely to be required to join a consumer redress scheme in the future.
If you are unsure whether you need to join a redress scheme you should visit the links above.
You can also:
· email us info@propertyredress.co.uk
· give us a call on 0333 3219418
· contact your local trading standards office
