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Why are complaints against agents on the rise?

Posted on 2015-11-18

Last month, redress provider The Property Ombudsman Scheme (TPO) published its latest interim report which shows the number of complaints made against property agents as well as the up-to-date number of agents signed up with the scheme.

This was the last report penned by out-going Ombudsman Christopher Hamer, who leaves his post this month after nine years at the helm. He will be replaced by Katrine Sporle CBE, formerly Chief Executive of the Planning Inspectorate for England and Wales, responsible for over 1,000 members of staff and a £60 million budget.

TPO is one of three Government-approved redress schemes, the other two being The Property Redress Scheme and Ombudsman Services: Property. These schemes are designed to provide property consumers – sellers, landlords, buyers and tenants – with a free, impartial and independent dispute resolution service of complaints made against agents.

On October 1 2014 it became mandatory for all letting agents to join one of the three schemes and as of May this year all letting agents are now required to publicly display which scheme they are a member of, both in their offices and on their websites.

So, what did the latest report have to say?

We have divided the report into two parts – complaints and membership numbers. Perhaps unsurprisingly, the predominant correlation is that as the scheme's number of agent members increases, so does the number of complaints.

Complaints

Between January 1 and June 30 2015, TPO received 9,141 complaint enquiries from consumers. Of these, more than half, 5,303, were related to lettings issues – nearly double those related to sales and an increase of 11.43% when compared with 2014's figure of 4,759.

The total number of complaints resolved by the scheme also increased by 8% to 1,587. Of these:

- 934 were against letting agents, an increase of 30%
- 596 were against sales agents, an increase of 39%.

Some 353 of the resolved complaints made against letting agents were dealt with by mediated resolution by TPO, an increase of 50% when compared with 2014. What's more, 581 cases were resolved by formal review. This represents an increase of just over 19%, as at the same time last year, this number stood at 487.

Membership numbers

TPO's membership levels increased by 3,641 (16%) in the first half of 2015 to reach 34,944. Some 13,419 of the scheme's members were letting agents, compared to 11,575 in 2014 – a significant increase of 16%. The rest of the membership is made up by sales agents, commercial sales and letting agents, buying agents, international agents, residential leasehold management agents and property buying and auction firms.

What should agents take note of?

The report, which can be viewed in full here, also presents a number of case studies and the lessons that agents can learn from these scenarios. Here are the Ombudsman's key pointers:

- When a tenancy application process is likely to require 'non-standard' information – potentially of a personal nature – agents should highlight this to potential tenants before they commit financially to proceeding with the application.

- In properties where multiple tenants are bound by one tenancy agreement, agents should continue to encourage the nomination of a lead tenant – which should be confirmed in writing, showing that all tenants agree to be represented by the nominated tenant. In the case where there is no lead tenant, and one tenant provides instructions on another's behalf, the agent should check with the other tenant before taking any action.

- Charging an indefinite renewal fee is no longer an acceptable practice. Agents should be aware that their terms and conditions must reflect the important aspects of the Competition and Markets Authority guidance as well as the requirements of their chosen redress scheme's code of practice.

- Unless there is an emergency, all access to a property occupied by a tenant must be conducted in accordance with the terms of the tenancy agreement. Agents are reminded that it is in the interest of all parties that sufficient notice is given prior to any visits – and that these requests and responses, alongside any key movements, are recorded.

Why has there been an increase in the number of complaints?

As alluded to earlier, the predominant reason that there are more complaints being made against letting agents is because there are now more letting agents than ever before.

On top of this, thanks to 2014's legislation, more agents will have joined a redress scheme in the past year. This means that some complaints that would previously have never been made – as the agent wasn't part of a redress scheme – are now being logged and dealt with.

It's clear that the lettings sector is coming under increased scrutiny as renting becomes the tenure of choice for more and more people.

Earlier this year, the English Housing Survey estimated that during 2013/2014, private renting accounted for more than 19% - around 4.4m – of households, up from 18% in 2012-13 and 11% in 2003. A similar report, released by global business firm PriceWaterhouseCooper, predicts that a quarter of all households will privately rent by 2025, with more than half of those under 40 living in the rented sector.

The increased importance of the sector is demonstrated by new regulations and legislation and the tightening and policing of existing rules.

In just the past couple of months, we have seen the Section 21 eviction process updated as well as rules introduced regarding smoke alarms and carbon monoxide detectors. And from February 2016, the Right to Rent scheme will be implemented on a national basis.

All of these factors combined, mean that as the number of agents that are members of a redress scheme grows and there is more legislation for agents to comply with, the number of complaints is likely to continue to increase.

However, the fact that all tenants and landlords now have the right to impartial redress means that hopefully, in time, the proportion of complaints compared to the number of operating agents actually starts to decrease as the small minority of 'rogue' operators continue to be discouraged from working in an increasingly regulated sector.

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