How will the new ombudsman work?
The Government plans to introduce a new Ombudsman to settle disputes between landlords and tenants
The second reading of the Bill also reaffirmed the Government’s commitment to introducing the Property Ombudsman (and the Property Portal), which all landlords must join, and will help landlords and private renters resolve disputes.
Following the third reading of the Bill, the Department for Levelling Up, Housing and Communities (DLUHC), maintained that the original measures, which include to ‘help resolve disputes between landlords and tenants more quickly, with a new private rented sector ombudsman’, will continue in the amended version of the Bill.
Note: this section was updated following the second reading of the Bill on 23 October 2023
The proposed changes announced by Secretary of State, Michael Gove, are to ‘address the gap in housing redress in relation to private rented sector complaints.’
This is aimed at stopping cases having to go immediately to court by strengthening the mediation process and providing a single and more streamlined scheme for both landlords and tenants.
The Government suggested that it is still looking at different options as to how the ombudsman service will be delivered, including how it fits within the existing framework of redress schemes.
However, the Ombudsman / the local council will be responsible for making sure landlords do not discriminate against tenants with children or those who are in receipt of benefits.
We will update this article again as more details emerge. Read on for more background to the current proposals on the Property Ombudsman.
One of the more interesting areas of the reforms within the Renters (Reform) Bill, for landlords, is the new Ombudsman, which the Government has said is likely to be a single organisation overseeing complaints.
This will be designed so that disputes between tenants and landlords can be settled quickly and cheaply, without going to court.
Note: this section was published following the introduction of the Bill to Parliament on 17 May 2023
The new Ombudsman for landlords will be in addition to the two schemes that exist to handle complaints by tenants and landlords about letting agents – The Property Ombudsman and the Property Redress Scheme. These government-approved schemes arbitrate complaints and offer binding redress.
They are compulsory for agents to join if they want to trade legally, and agents must comply with each scheme’s adjudicator-led decisions.
Sean Hooker of the Property Redress Scheme said recently,
We agree with the principle of a single route for tenants to access effective and affordable complaint resolution. I cannot see how trying to solve the issue of consumer confusion, by introducing yet another Ombudsman, is practical or will benefit anyone. Instead, integrating landlord redress and plugging the gaps - such as rent to rent - into the existing process, incorporating mediation but having a single, accessible entry point, with assistance guidance and signposting is the way forward.
Membership of the new Ombudsman will be a legal requirement for landlords, and local councils will be able to take enforcement action against those who fail to join.
This will range from a civil penalty of up to £5,000, through to a £30,000 fine, with the possibility of criminal prosecution and a Banning Order for repeat offenders.
There will be a fee for membership, which has not yet been confirmed, although the Government has said it will be “a relatively small amount per property”, “proportionate and good value”.
The intention is that this system will be aligned with registration on the Private Rented Property Portal, so landlords only have to submit their information once.
Following the introduction of the Bill to Parliament on 17 May, Sean Hooker discussed the Ombudsman in his blog for LandlordZONE.
He points out that what the Government announced they are putting forward, both in their fairer renting white paper and their press release just before the Bill went live, differs slightly from what is actually in the Bill’s wording.The Government’s press release said:
A new Ombudsman will provide quicker and cheaper resolutions to disputes, while a new digital Property Portal will enable landlords to understand their obligations and help tenants make better decisions when signing a new tenancy agreement. This will give confidence to good landlords, while driving the criminal minority out of business.
Sean explains:
The Bill says they may introduce landlord redress schemes and a private rental sector database and confers powers on the Secretary of State to procure these provisions in a manner they see fit. We will therefore get both a register and redress, but when and what this will look like remains to be seen.
Sean, who has had a lot of input with the Government on the introduction of landlord redress and the form landlord registration will take, believes these are positive changes that help address the gap in dispute resolution for tenants whose landlords do not use an agent, or where the issues fall under the obligations of the landlord and not their agent.
He also highlights that the final details of what will be put in place have yet to be revealed and the Government is still working on the model.
We at the Property Redress Scheme will work with them to help develop a joined up and easily accessible system that helps raise standards in the sector and provides the reassurance and protection to the tenant that is needed.
For more insights on the Renters (Reform) Bill, listen to a special episode of The Property Cast with Sean Hooker, Head of Redress at the Property Redress Scheme, and leading property expert Kate Faulkner OBE.
