The Ministry of Housing, Communities & Local Government (MHCLG) has announced this month that it will bring forward legislation to require landlords to join a mandatory redress scheme. This is part of a wider set of proposals to shake up redress across the entire residential sector and fill in gaps in existing redress.
MHCLG is committed to ensure that all private rented sector tenants have easy access to high-quality redress as quickly as possible. With that in mind, the proposals put forward by the government are that any landlord redress scheme should build on and improve the current system for agent redress. However, existing redress scheme providers will not automatically be approved to provide redress for landlords and there will be a level playing field for any organisation wanting to get involved. Slightly oddly, the current proposals state that all landlords will be required to join a redress scheme, even if they are using an agent who is themselves a member of a redress scheme.
MHCLG has considered how a landlord redress scheme will be costed and has determined that it is best for the schemes themselves to determine a viable fee structure, possibly based on the number of properties a landlord owns. Whatever fee structure is adopted it will need to be submitted to the Government for approval and must be reasonable and proportionate but also sufficient to enable high quality redress and complaint handling.
Enforcement is likely to be undertaken by local trading standard authorities with fines for individual breaches set at £5,000. Sanctions for multiple breaches are yet to be explored.
Finally, when this redress scheme finally becomes law the ‘How to Rent’ guide will be amended along with other similar literature to ensure that landlords are made aware of this new legislation and the resulting obligation. Landlords will also be encouraged to sign up to a general code of practice.
This is part of a wider package including new redress schemes for new build property and for flat leaseholders. There will also be an umbrella organisation to ensure that every complainant is signposted to the correct redress scheme. There is still some way to go as the proposal is to set up a working group to decide how best to progress the proposals. This is likely to result in another consultation before legislation is put before parliament. However, the direction of travel is clearly set.