Mandatory redress schemes are coming – for landlords!

This is expected (but for some, unlwelcome) news.

The Minister for Housing, Communities and Local Government has announced today that membership of a redress scheme will become mandatory for landlords.

There are a few things that are not yet clear:

• Will it require landlords who have houses managed by an agent to be a member of a scheme?
• When will it become law?
• Will any new schemes start?
• How will this be enforced?  Nationally, or locally?
• Will the schemes have the same entry requirements as for agents?  Eg dedicated client money accounts, Client Money Protection?

The first point is needing clarity because by law, Letting Agents MUST belong to a redress scheme.  We do, the TPOS redress scheme.    Therefore there is no point being part of a scheme as the purpose of a redress scheme is as described – to offer redress.  If a tenant has a complaint which the agent has failed to address to their satisfaction, they can take the matter to the redress scheme they are part of.  The agent acts “as the landlord” so there is no need for the landlord to become involved, as the agents actions are via agency  law the landlords.

The second point is needed to allow landlords time to register and apply.

The third point is due to the recent resignation from the sector of one of the redress schemes, giving only two options.  That doesn’t give the consumer (the landlord) much choice in who to pick).

The fourth point is a key one – how will it be enforced?  Who will tenants go to if they have a landlord who refuses to answer emails or calls about a deposit return, they find they are not registered with a scheme, and they have no-one to go to.  Trading Standards is an immediate choice, however they presumably lack the resources to take on this task.   An obvious one would be to see the widespread implementation of more citywide or regional licensing schemes, which will result in additional costs for landlords, which will inevitably see rents rising, or in areas where landlords cannot raise rents, an increase in landlords exiting the market.

A positive change from this will be an increase in professionalism from private landlords, with landlords expected to show knowledge of housing law and being held accountable, something that is needed within the  PRS.

More info is here:  Gov.uk website

We will update once we know more!