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Will councils police redress scheme rules?

Posted on 2015-09-08

Since last October all letting agents have been legally required to be a member of one of three Government-approved redress schemes (The Property Ombudsman Scheme, The Property Redress Scheme or Ombudsman Services: Property).

And from May letting agents have been legally required to disclose their full fee tariff, display which redress scheme they are a member of and whether or not they offer Client Money Protection to tenants and landlords. Our comprehensive write-up on that legislation is available here.

Most would agree that this type of legislation is extremely positive for the lettings sector and will go some way to eliminating the small number of rogue agents still operating in the industry.

The question is, though, are the rules being enforced? And what have the nation's councils been doing to make sure all agents are pulling their weight?

So far it seems to have been a pretty mixed bag, with a number of industry insiders speaking out against a lack of enforcement and a small number of councils publicly stating their ambitions to come down hard on agents that don't comply.

Just seven weeks after the introduction of mandatory membership of a redress scheme, in November 2014 fledgling London TV channel London Live claimed that too many of the capital's renters were unaware that it’s now easier to tackle rip-off or rogue letting agents.

The channel, which is linked to the Independent and London Evening Standard newspapers, asked all 32 of the capital's borough councils if they were enforcing the new rules.

It reported at the time that it got a varied range of responses. For example, Havering Council said that it was not policing the regime. And Kensington & Chelsea allegedly claimed that it believed the legislation was not at that point fully operational.

On the other hand, Newham Council told London Live that it had fined nine agents £5,000 each for not registering as a member of one of the three schemes.

Some interesting findings, although considering London Live asked the borough councils so early after the introduction of the legislation, many may now be fully aware of the rules and policing them accordingly.

An example of this came to the industry's attention in July, albeit well outside of London. Sheffield Council reported that it had fined eleven agencies a total of £37,000 for not joining one of the three redress schemes.

The council claimed that it was the first authority since Newham to punish agents for non-compliance.

Hot on the heels of this news, however, just a week later one agent spoke out about his dismay that there had not been one redress scheme related prosecution in his region. Ajay Jagota, of KIS Lettings in the North East, asked The Gateshead, Newcastle, North Shields, South Shields and Sunderland Councils if they had made any prosecutions and all replied that there had been none.

Jagota said that with just five minutes of 'Googling' he could find a number of agents in his area that were clearly not a member of a redress scheme.

The latest development, which came at the end of August, was from the City of York Council. It reported that it is currently actively seeking to introduce fixed penalty notices, in the region of £5,000, for agents that are not a member of a redress scheme or are not disclosing full details of their fees in line with the legislation introduced in May.

As we can see, slowly but surely, more councils are taking the necessary steps to police these regulations but it seems there are still regions of the country where little or nothing is being done.

Approaching the one year anniversary of the introduction of compulsory redress scheme membership, it's positive to see that a number of rogue operators have been fined but more needs to be done to weed out this shrinking but harmful portion of the lettings industry.

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