Who needs to join?

Introduction

All property agents and professionals that carry out estate, lettings and property management work in the property industry have a legal responsibility to join an authorised redress scheme. The Property Redress Scheme (PRS) is authorised by the Ministry of Housing, Communities and Local Government (MHCLG) and National Trading Standards Estate and Letting Agent Team (NTSEALT) to provide redress for estate, lettings and property management agents.

The Property Redress Scheme, is also authorised by the Chartered Trading Standards Institute (CTSI) to resolve disputes, under the ADR Regulations 2015.

Under our CTSI authorisation we offer a service to property professionals e.g. company landlords, inventory clerks, tenant relocation experts, property finders, removal companies. The advantage for these kinds of professionals is that membership offers an open and transparent resolution service which can increase their reputation and offer their customers confidence.

By joining the Property Redress Scheme, the property agents and professionals agree to resolve complaints using our resolution process and agree to abide with our final decision when they are legally required to do so.

What is the law?

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. 

The Estate Agents Act 1979 (here) defines

"Estate agency work" as that including 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

The Act also confirms the exceptions which include work carried out by solicitors, credit brokers, surveyors or those carrying out property valuations.

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. 

Guidance for lettings and property managers is available here and the legislation is available here

"Lettings agency work" is defined as 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 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. Lettings agency work does not include the following things when done by a person who only does these things:

· 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 other

The exceptions:

It also does not 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. 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 a business will be subject to the duty to belong to an approved redress scheme.

Other exclusions include:

• 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 providers of social housing, that is, 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 property management 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 instructed an agent to manage a house let to a tenant in the private rented sector. It would also arise where 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 legislation will apply to people who in the course of their business (see below) manage properties, for example, 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 does not apply to managers of commonhold land, student accommodation and refuge homes; receivers and insolvency practitioners; authorities where Part 3 of the Local Government Act 1974 applies; right to manage companies; legal professionals and property managers instructed by local authorities and social landlords.

For more information and FAQs see

https://www.gov.uk/government/publications/lettings-agents-and-property-managers-redress-schemes

What does ‘in the course of business’ mean?

The requirement to belong to a redress scheme only applies to agents carrying out lettings or property management work ‘in the course of business’ and being paid for a role which is their usual line of work.

Some examples of ‘informal arrangements’ which would not come under the definition of ‘in the course of business’ are

· Someone looking after the letting or management of a rented property or properties on behalf of a family member or friend who owns the property/properties, where the person is helping out and doesn’t get paid or only gets a thank you gift

· A friend who helps a landlord with the maintenance or decoration of their rented properties on an ad hoc basis

· A person who works as a handyman or decorator who is employed by a landlord to repair or decorate their rented property or properties when needed

· A landlord who looks after another landlord’s property or properties whilst they are away and doesn’t get paid for it

· A joint landlord who manages the property or properties on behalf of the other joint landlords

Whilst it is not possible to cover all eventualities in this note one of the key issues to consider when deciding what could be considered an ‘informal arrangement’ is whether the person doing the letting or property management work is helping out an individual as opposed to offering their services to anyone who wants to use and pay for them

What happens if I do not join the Property Redress Scheme?

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 the UK, estate agents who continue to work without being a member of a consumer redress scheme may be fined £1000 with the potential to receive a formal warning or be forced to close the business

In Wales, all letting agents and landlords are required to register with Rent Smart Wales. Part of the licencing application criteria is to show that they are a member of a consumer 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 has been issued.

The UK government has announced that private landlords in England are likely to be required to join a consumer redress scheme in the future.

Not sure what you are required to do by law?

Visit the links provided above

Give us a call on 0333 321 9418

Email us at info@theprs.co.uk

Contact your local trading standards https://www.gov.uk/find-local-trading-standards-office