Estate and letting agents are being urged to check that they are signed up with an approved redress scheme that covers the full remit of their work.
The warning follows a recent tribunal that penalised a business that was signed up to a redress scheme for its letting agency work but not for its property management work.
In one of the first decisions of its kind, the Upper Tribunal upheld a fine of £3,000 against the business for its failure to belong to an approved redress scheme for property management.
Its membership of the Property Ombudsman Scheme covered it for residential sales and lettings, commercial sales and lettings and some property management, but not for residential leasehold management.
The decision has prompted National Trading Standards to issue guidance to estate and letting agents across the country, focusing on agents ensuring their redress scheme covers all areas of their work, whether it’s sales, lettings or property management work.
“If you’re already signed up to a redress scheme, you may think your business is covered, but you should check that this covers the full breadth of your company’s activities” says James Munro, head of the National Trading Standards Estate and Letting Agency Team.
“The recent tribunal decision shows businesses that are signed up to redress schemes for one area of their work but not for others may face hefty penalties in the courts.”
Failure to be a member of a redress scheme, when legally required to do so, could result in a penalty notice being issued against the business.
Sean Hooker, head of redress at the Property Redress Scheme, adds: “Whilst PRS membership covers most agents for all the work they do, they must tell us from the outset the areas they undertake work in so we can record this under their membership.
“Agents must also ensure that all their branches and offices are registered separately and the appropriate fee paid. If you are in any doubt whether you are fully compliant please contact us immediately”
And Katrine Sporle, Property Ombudsman, comments: “TPO’s online membership and website provides detailed information about the categories of work TPO provides redress for, the options available, and clarity around the need to be registered for each category.
“Our membership team is on hand to give support and advice for new and existing members alike, so do please contact us if there is anything you are unsure about or need guidance on.”
The specific ruling referred to by NTSELAT - which you can see in full here - resulted from a complaint from a tenant at a residential block of flats which an agency had managed for two years, stating that the agency was not a member of an approved redress scheme. It transpired that it was a member of TPO for its letting agency work but not for its property management work
The specific guidance from National Trading Standards reads:
“Make sure that your business is signed up with an approved redress scheme for the correct line of work (Sales, Lettings or Property Management Work).
“Review your existing terms of agreement/membership to ensure your redress scheme covers the full activities of the business.
“Check the terms of agreement/membership to confirm if your business is required to pay membership for individual branches.
“As of 1st April 2019, Letting and Property Management Agents in the private rented sector are required to belong to a Client Money Protection (CMP) scheme if holding client money. If you’re an Agent who is required to belong to a CMP scheme, you should be displaying a certificate of your membership at your premises and online. CMP schemes should all be providing certificates. If you’re having difficulty in obtaining a certificate, please contact CMPschemes@communities.gov.uk”