Ombudsman calls for regulation

In his 2012 Annual Report, The Property Ombudsman (TPO), Christopher Hamer, reiterates his call for regulation of letting agents. At the very least Mr Hamer argues that all letting agents operating in the UK should be required by law to join the Ombudsman scheme.
Mr Hamer says it is important that the Government heeds the current calls from TPO,  and trade associations such as the National Approved Letting Scheme (NALS), Association of Residential Letting Agents (ARLA), and the Royal Institute of Chartered Surveyors (RICS) and consumer groups such as Which? for legislation to embrace lettings agents so they can be treated in the same way as sales agents and provide a consistency of redress for consumers.

He notes that whilst the Government wants to avoid over regulation, the private rented sector has grown dramatically over the last decade with more people, including an increasing number of families with children looking to rent accommodation. As a consequence of this growth the role of letting and managing agents has also grown dramatically and is now a 1 billion per annum business, handling some 14 billion per annum of clients' money. Whilst around 60 per cent of lettings offices in the UK have voluntarily registered with TPO and follow its lettings Code of Practice, Mr Hamer argues that unless legislation is amended to require all letting agents to adhere to a set of common standards and offer their consumers a route to free redress, tenants and landlords alike will continue to be exposed to avoidable risk.

Although the Government has made clear that it is looking to reduce the burden of regulation on businesses those organisations involved in the property sector want some form of regulation and realistically legislation is the only vehicle that can bring 100 per cent of letting agents within the fold.

The Property Ombudsman scheme  provides a free, independent and impartial dispute resolution service to consumers, landlords and tenants who are dissatisfied with the service provided by letting agents registered with TPO. It can provide redress to place consumers back in the position they occupied before the complaint arose. Where appropriate, the Ombudsman can make compensatory awards in individual cases up to a maximum of 25,000 for actual and quantifiable loss and / or for aggravation, distress and inconvenience caused by the actions of a registered firm. All TPO members agree to be subject to the ombudsman's powers of redress  The TPO also has a mandatory code of practice which all registered agents are bound by. One of the most important areas covered by the code of practice relates to the protection of clients money. Agents hold money belonging to both tenants and landlords and it is vital that it is protected in a properly audited "Client Account". All TPO members must hold clients money in an account within an institution authorised under the "Financial Services And Markets Act 2000".

The Property Ombudsman noted that  approximately 7,000 letting agencies are already signed up to the TPO code of practice. In renewing his call for letting agents to be subject to redress legislation he said 'More and more people will be looking to the private rented sector for their housing needs. Landlords and tenants should check that their letting agent operates a client account for rental monies, which has financial protection and that is independently audited annually. Without this protection your money is at risk and you cannot be sure it will be returned in the event of a failure of the letting business.

Parkinson Property

3rd March 2013


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