Calling all letting agents and property managers!
(England only) From 1 October 2014 you MUST belong to one of the three government approved ‘property redress schemes’ or you could be fined up to £5,000.
Thats not to say that a penalty notice will drop on your doorstep on the 2nd, but you will be breaking the law.
Which is never a good idea.
So what are these ‘redress schemes’ and why are you being asked to do this?
Agent regulation – the first step
Agents and property managers control valuable assets (houses and flats) and hold huge amounts of other people’s money. But up until now there has been no regulation. At all.
For example, there is nothing to stop a criminal, the day after he is released from prison for fraud, from setting up a high street letting agency and if you (in all innocence), place your property with him, running off with your money.
Full regulation of agents is not with us yet. However making agents and anyone else who manages someone else’s property, sign up to a redress scheme is at least a start.
It provides an independent service customers can complain to, which will have the power to order the offending agent or property manager to pay compensation or maybe (for less serious issues) just apologise.
It is somewhere they can get redress.
The three schemes
There three schemes currently approved by government:
The Property Ombudsman is very well known in the industry – if you are an agent you are probably already a member. They have their own code of practice and have been around for a long time.
I know very little about the Ombudsman services apart from the fact that the same organisation runs several ombudsman schemes in several industries so they obviously know what they are doing.
The Property Redress Scheme is the new boy on the block. It has been specifically set up to be there for the smaller organisations that are not part of the other schemes and aims to provide a straightforward and supportive service.
I am on their Council so I know a bit about them.
Do YOU need to join one of these schemes?
If you are a letting agent, obviously yes.
But what about property managers? First – what are they?
You will be treated as a property manager if you arrange services, repairs, maintenance, improvement, or insurance or deal with any other aspect of the management of residential premises, for a landlord, if this is done ‘in the course of a business’.
So if (for example) you are helping out a friend, on an unpaid basis, to manage their rented house because they are new to the business and have come to you for help – you will not need to register with one of the schemes.
Neither will you need to register if you have a reciprocal (unpaid) arrangement with another landlord that you will each look after each others properties when you are on holiday.
However you WILL need to register if your work involves looking after other landlords properties and getting paid for it. Even if the properties belong to a family member.
The key factor is whether you get paid for doing the management or not. If you do – you will need to register. If you don’t – you probably won’t need to register.
What happens if you don’t register with a property redress scheme?
Your Local Authority can impose a fine on you of up to £5,000.
This won’t happen immediately – you will be served a 28 day notice during which you either need to sign up or appeal, if you think the rule does not apply to you.
But it will happen if you need to register but don’t. It will be easy for the Local Authority (and anyone else) to find out if you have registered or not, as all the schemes will publish a list of members on their website.
What should you do now?
If you think the new rules apply to you, then you need to join a scheme. Take a look at their websites and see which one you like the best.
If you are a small agency or property management team (or just work on your own) then you may want to consider the Property Redress Scheme as it was set up specifically to provide an easy option for people like you.
If you want to find out more, all schemes have a telephone helpline, which you will find one their website.
But whichever scheme you choose – you need to do it now!