Renters' Rights Bill

Written evidence submitted by the Property Redress Scheme (RRB87)

1. About the Property Redress Scheme ("the PRS")

1.1 All property agents/individuals 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.

1.2 The PRS is a consumer redress scheme set up in 2014 and authorised by the Ministry for Housing, Communities and Local Government (MHCLG) and the National Trading Standards Estate and Letting Agent Team (NTSELAT) 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.

1.3 As an established and well proven redress scheme in the property sector, the PRS dealt with almost 2,500 complaints in 2023, the greater part of which relate to lettings. We are making this evidence submission to give the benefit of our experience in operating an existing redress scheme which deals with various types of complaints in the private rented sector.

2. Executive summary

This response sets out the position of the PRS to the introduction of a Private Rented Sector Ombudsman under the Renters Rights Bill covering the following areas:

· T he intention of the new ombudsman and how it fits the current redress landscape

· The scope and type of complaints that should be covered by the ombudsman

· Thoughts on the Housing Ombudsman Service being the preferred provider

· A single gateway for complaints

· The role and remit of the new ombudsman

· Other points for consideration around introduction of mediation into housing disputes

3. The government’s intention

3.1 The Government’s intention is to: "Provide for the introduction of a new ombudsman service that will provide quick, fair, impartial and binding resolutions for tenants’ complaints about their landlord, bringing tenant-landlord complaint resolution on par with established redress practices for tenants in social housing or consumers of property agent services."

3.2 Whilst the concept is clear and the objectives broadly defined, how the new ombudsman would integrate into the current and future regulatory framework is not.

3.3 The obvious need to provide a level playing field for tenants across all tenures, providing access to quick, efficient and cost-effective dispute resolution and complaint handling is unquestionable. However the objective - to provide a simplified and less confusing environment for access to redress - does not appear to be achieved by introducing a separate and new scheme to the market

4. The current regime

4.1 Of course, the current regime already has in place deposit protection and agent redress schemes and these are proven to work effectively, providing a high level of protection for those tenants whose landlords use agents and where tenancy deposits are taken.

4.2 It makes no sense to undo this existing and well-proven provision (at least for the foreseeable future) and expect a new body to replicate it, so we see the logic of concentrating on where there is a lack of provision. However, there is little clarity on how this new body will integrate into the current system and where the boundaries are between the different bodies.

5. A holistic approach and integrated system

5.1 The objectives also talk about the new service providing a more holistic approach than just complaint handling but equally they make it clear that the new body will not be a regulator. The provision of help and advice, dealing with systemic issues, and providing advocacy and support for vulnerable tenants, stray very closely to becoming a quasi-regulator.

5.2 A lot of the aspirations for the provision of the new service are dependent on collaboration and cooperation with existing services and future aspirations such as the property portal or a possible private rental sector regulator.

5.3 There is huge scope for an integrated system, however this is not defined in the remit and requirements for the new service. An integrated system will take a concerted effort to coordinate and will need the involvement of many parties. Some of these parties may be in direct competition for a potential tender but will need to work together to deliver the big picture after the contract is agreed.

5.4 The legislation and its supporting notes do not explain how and what type of complaints the ombudsman will be expected to deal with.

5.5 Since the PRS became an approved scheme, it has supported the need for a level playing field and from day one, we allowed landlords to join the scheme as voluntary members.

5.6 We also have the experience of being part of a wider group of companies, one of which (Tenancy Deposit Solutions Limited – t/a mydeposits) has a contract with the Government to protect tenants’ deposits and, as part of this scheme, provide alternative dispute resolution to resolve deposit disputes.

mydeposits has been running, along with the two other deposit protection schemes, since 2007 and has dealt with over hundred thousand individual cases between tenants and their landlords or agents over deductions from their deposits.

6. The scope of complaints

6.1 We understand the sector and the nature of dispute types that tenants will raise against their landlords.

6.2 We know that complaints raised as part of the letting process will mirror those we deal with as an agent scheme and will reflect issues like:

· material information in advertisements,

· discrimination such as against benefit recipients, families or tenants who want to rent with a pet,

· failed referencing, holding deposits, tenant fees abuses

6.3 Complaints about the condition of the property, be they minor issues such as doors/locks not working all the way through to more serious structural issues with the property which could be deemed hazards and requiring rectification by the landlord.

6.4 Tenant complaints about agents often relate to minor repairs not being done promptly or properly; whilst these would not trigger action by a local authority or enforcement agency, they nevertheless have a lasting impact on the quality of life and the wellbeing of tenants occupying rental properties. We foresee a large volume of these type of complaints against individual landlords when landlords are required to join an ombudsman scheme.

6.5 Of course, the current agent redress schemes are limited in what can be dealt with, as we can only deal with the service elements and duty of care obligations to tenants. We are unable to deal with complaints that relate to the the legal obligations of the landlord, such as repair obligations or where the utility of the amenity has been diminished and this loss could/should be reflected in the rent paid by the tenant.

6.6 This said, where tenants have an agent managing their property:

· the agent is usually their primary - and in many cases their only - contact with anyone responsible for issues with a rental property

· the agent themselves may equally have limited day to day contact with the landlord

· landlords engage agents to be their delegated representative and for a host of reasons, want to be relatively hands off from the process and rely on the expertise and professionalism of a good agent

6.7 This does not mean that landlords abdicate their responsibilities and legal obligations: far from it. We deal with many complaints where poor and incompetent agents expose landlords to risks of non-compliance and breaking the law and we strongly point out to landlords the importance of them doing their due diligence on their agent and to hold their agents to account.

6.8 Landlords are ultimately responsible for their properties, the safety of their tenants and for their legal obligations. Ignorance is no excuse and unconscious incompetence is something the sector cannot tolerate or afford.

6.9 For these reasons, we welcome and support the mandating of all landlords to themselves be part of a redress scheme, to which they are ultimately accountable.

7. Indication that the Housing Ombudsman Service (HOS) will be the sole Private Rented Sector Ombudsman

7.1 The Government’s approach strongly indicates a solution for quickly and easily setting up a new and Private Rented Sector Ombudsman is to merge it with the current Housing Ombudsman Service. (HOS).

7.2 Whilst this may have merits as the HOS already has specific authorisations and accountabilities and has the expertise in dealing with tenant disputes in the social sector, it has no depth of expertise in the private rented sector or a membership set up suitable for dealing with the approximate 2.5 million individual landlords in England. Whilst these skills can be acquired, this does not mean the service is ‘oven ready’ to implement this on day one as they have lobbied the Government they can do.

7.3 They also have not provided a clear indication of how they would deal with the massively expanded remit they would inherit.

7.4 Their current membership, consists of local authorities and their delegated subsidiaries, registered social landlords and a handful of mostly corporate landlords. These organisations are mostly highly regulated and have the infrastructure and processes in place to be compliant and the mechanisms to put in practice any HOS decisions.

7.5 The remit of the new ombudsman encompasses millions of landlords ranging from huge national build to rent and portfolio landlords right down to landlords with a second property that they rent out for an investment or supplementary income.

7.6 The range of competencies and the resources that the new ombudsman will need are wide ranging, and therefore the mechanisms needed to deal with the entire market will be complex and challenging.

7.7 Much thought will be needed on how to overcome these challenges. We believe that this is achievable, and our position is that:

· we support the aspiration to have a single process with a consistent and robust route for all tenants, regardless of their tenure to be able to access quality redress

· we have always supported the idea of a single gateway for tenants to access redress, which pulls together all the options they have into a simple portal with a triage and signposting facility.

· If HOS is to be the Private Rented Sector Ombudsman it could deal with more serious issues at the larger landlord operations like it does for social housing.

· More low level type complaints which need quick resolution could be dealt with by the existing redress provision particularly where there is an agent involved – in this structure the landlord could delegate the responsibility to deal with any issues to the agent in the first instance.

8. A single gateway for tenant complaints

8.1 A single gateway with a portal based triage and signposting facility is still the most viable option in our view but we understand this is likely to mean developing systems and infrastructure to make this a reality.

8.2 In our view the Government’s preferred option of going down the single provider route makes the development of such a portal more difficult as the new ombudsman will need to develop the infrastructure, own it and run it themselves. However such a portal will be needed so it can interact with the existing framework already in place – this includes not just the agent redress schemes, but the deposit schemes and any other dispute resolution services that may already exist or come into existence.

8.3 We will of course work with the Government and any selected ombudsman to help integrate it into the existing framework, however it should be realised that there is no bolt-on solution that neatly or quickly fulfils the remit and desired outcome the Government expects.

9. The role and remit of the ombudsman

9.1 Our greatest concern is that the HOS’ vision for what is needed differs from what ultimately the tenant wants and expects. This is not a criticism of the organisation but is based on their own expressed understanding of what they would provide if they were appointed to deliver the role. We refer to the evidence given by the Housing Ombudsman to the equivalent committee that was empowered to scrutinise the predecessor bill to this current bill – The Renters (Reform) Bill.

9.2 We understand this is an entirely new bill and indeed a new Government, however the provisions and intentions in the new bill have changed little, if at all. The arguments for the introduction of redress were good then and are good now.

9.3 In his evidence Richard Blakeway made the following statement:

"One thing I would stress is that an ombudsman should not be perceived as dealing with leaky taps or broken windows. These are not low-level disputes; we deal with some complex disputes in our current casework, as Committee members will have seen through our decisions. That approach needs to be applied here. The more you can apply that approach, the greater confidence people will have in a free and impartial alternative to the courts, or a free alternative to the courts, rather than feeling that their only effective route to redress is the courts process, given all the pressures on it."

Richard Blakeway – Evidence to Committee for the consideration of the RRB 14th November 2023. (Hansard)

9.4 This clearly indicates that the Housing Ombudsman sees the new service dealing with serious maladministration and providing an alternative to courts

9.5 This of course is a valid and appropriate part of the remit of the service; however, it totally misses the real world need and value the service could offer to the vast majority of tenants.

9.6 Most complaints will never be of the scale to attract, or be escalated to, the category of maladministration or the need for a quasi-judicial process. What most complainants need is the intervention of a third party to help put things right and for the tenant to get back to their lives and feel safe and secure in their own home. To us this means:

· early, effective and straightforward intervention, where problems can be resolved before they get out of hand

· dealing with the low-level disputes as well as having the teeth to deal with those high-level misdemeanours where serious abuse of the tenant’s rights have occurred.

9.7 Not dealing with the small complaints will lead to a significant gap in the protection of tenants and still leave millions with no effective redress. It also risks more problems escalating in the short term, to the extent that the new powers granted could be under strain with in a very short time.

9.8 The redress landscape in the private sector is complex and whilst this has been picked up as weakness, there is so much overlap between the different agencies that to merge redress into one all-powerful entity raises risks because it:

· would risk losing some of the utility of the entities it replaces

· could stifle innovation and challenge

· presents a single point of failure which could lead to major detriment.

9.9 The answer lies in the system being streamlined and the focus being on making it less complicated for the user and that they get the appropriate remedy for the best outcome.

9.10 An unspoken rule in what we do is the only thing worse than not helping somebody is for our involvement to make it worse.

9.11 The Government has the opportunity to get this right first time and whilst the pressure to find a solution quickly is great, taking what seems like an easy path may solve some of the problems but create a whole set of new ones should be avoided.

10. Other Comments

10.1 We welcome the Government’s commitment to tackle the issue of "rent to rent" and note the following statement.

"The Government may use the regulations under subsection (4) to change the meaning of residential landlord to provide for the term to cover superior landlords instead of immediate landlords. This is to allow flexibility for immediate landlords to be members of a redress scheme other than the private rented sector Ombudsman, if deemed appropriate. It is Government’s intention that both intermediate and superior landlords will be required to be members of a redress scheme."

10.2 We, however, believe that whatever redress scheme this part of the sector is placed in, the scheme must be able to deal with both complainants from the occupying tenants in the property and those of the superior landlord against the immediate landlord.

10.3 In many of this these cases, the holistic approach dealing with both sides of the equation is the only practical way to do this.

10.4 There are very few "rent to rent" problems that do not affect both sides and for each party to pursue their cases through separate routes, risks gaps, inconsistency and confusion.

10.5 We totally understand that the tenant’s home should be registered on the database, however the redress delivery should be effective for this model, albeit it we support a crackdown on the less desirable practitioners in the market.

10.6 We note the following provision in the Bill:

"Subsections (6) and (7) clarify and define what activities an approved or designated redress scheme can undertake beyond providing mandatory redress for prospective, current, and former tenants of residential landlords as defined under Clause 61. This includes being able to offer redress to consumers and tenants of those who voluntarily join the scheme but have no legal obligation to do so. These subsections also allow for the scheme to specify types of complaints it will not investigate or determine. It also allows for an approved scheme to offer a mediation service so that the scheme can act as mediator to work toward mutual resolution of complaints that residential landlords may have against their tenants. This mediation service would be different to redress in that tenants would have to voluntarily take part, and the scheme would not seek to, nor could it, issue a binding decision which a tenant would have to adhere to."

10.7 This is a sensible provision and we welcome it, however whilst this empowers the selected ombudsman to provide a voluntary service, this does not mean the service will actually be provided.

10.8 Whilst the provision for voluntary suppliers may well opt to join a redress scheme this may not be the new Ombudsman and whilst it may be a scheme such as ours, we will need to see whether there are gaps, consistency and the tenant and consumer gets the best outcome.

10.9 We also note the following statement from the official guidance to the bill that states:

"The Renters' Rights Bill makes provision for the ombudsman to provide landlord-initiated mediation, enabling disputes to be resolved before they escalate to court. We are working with the Ministry of Justice to explore further options for early dispute resolution."

10.10 Again we very much welcome this and we ourselves set up a voluntary mediation service during the Covid period and it continues to this day. It has had a limited take up but where it has been used, it has proven highly effective.

10.11 This contrasts with the Government’s pilot initiative designed to help with possession claims during Covid, which had almost negligible impact and made no perceivable impact on court hearings. The main reason for this was the option to use mediation was far too late in the process, being in the doorsteps of the court, instead of much earlier in the process when mediation can provide effective in setting everyone’s expectations and understanding of the cost and time of the legal process.

10.12 The Government has indicated it wants to see less court cases and also for possession claims relating to alleged breaches of by tenants to give them more opportunity for them to remain in their homes.

10.13 To this end they believe that the notice periods for tenants in arrears should be extended from where they are now, on the basis the tenant should be given the opportunity to make good the arrears or come to an arrangement.

10.14 The effect of this, however, could be that bad tenants get away with wilfully not paying rent or tenants who genuinely cannot afford the rent but need a possession order to get alternative accommodation are forced to remain in the property accumulating additional debt.

10.15 We believe that mediation and strong pre-action protocols mandating landlords to provide evidence of efforts to resolve matters by ADR should be put in place so that where court proceedings do happen, a judge can ensure the detriment to both parties is mitigated.

10.16 If this means the discretionary ground is easier and quicker for a landlord to get possession from a bad tenant, this would be a more proportionate measure.

10.17 Local authorities should also be involved in this pre-action process, where there is a threat of homelessness and the tenant needs to be provided with alternative affordable housing as a priority.

October 2024