Property Management Redress Scheme

The Enterprise and Regulatory Reform Act 2013  and Redress Schemes for Lettings Agency Work and Property Management Work (Requirement to belong to a scheme etc) (England) Order 2014  came into effect on 1 October 2014.

Requirements:

The legislation requires that persons who engage in letting agency work and property management work ‘in the course of business’, belong to a redress scheme for dealing with complaints in connection with that work.

The requirement is to belong to one of the two Government approved schemes:

• Property Redress Scheme
• The Property Ombudsman

The legislation excludes some arrangements from this requirement. This list isn’t exhaustive and property managers should check the legislation to see if any exemptions apply:

• Informal arrangements - Where a person is helping out rather than being paid for a role which is their usual line of work.
• Registered Providers and Local Authorities
• Refuges and similar places for victims of violence etc run by charities
• Employers finding accommodation for staff
• Higher and further education authorities
• Freeholders.
• Managers of common hold land, student accommodation and refuge homes
• Receivers and insolvency practitioners
• Right to manage companies
• Legal professionals and property managers instructed by local authorities and social landlords.

It specifically includes:

• Web based agents
• Potentially charities, if they are being instructed by another party and receive payment.

It includes the following types of tenancy:
 

The Council’s approach to enforcement of these requirements:

• The failure to belong to a redress scheme is a civil offence that requires a lower burden of proof than a criminal prosecution. In order to serve a penalty notice, the enforcement authority must be satisfied that, on the balance of probabilities, a breach has been committed.
• A proactive check will be made of every person managing property in the city known to the Council of the two redress scheme websites to confirm their membership status, if any.
• In every private sector housing investigation case involving a company or individual managing property not previously known to the Council, the investigating officer will conduct verification checks on the two redress scheme websites to confirm their membership status, if any.
• If there is any doubt about the person or company’s membership of a redress scheme, we may choose to write to each redress scheme provider to confirm whether they are registered.
• If a person or company managing property is found to have breached their legal requirement, we will Serve Notice of Intention to impose a penalty. This will be served within 6 months of the date of which a failure to comply with requirements is noted. This sets out the reasons and the amount of the penalty. The recipient of the notice has 28 days to make written representations or objections starting from the day after the date the notice of intention was sent.
• At the end of the 28-day period, consideration will be given to any representations made. Whilst there is the ability to vary the amount to be charged or not to proceed to issue the charge, there will be a presumption to proceed with the maximum penalty charge unless extenuating circumstances can be proved.
• If we proceed to impose the penalty as per the Notice of Intention, we will issue a Final Notice to the person or company and enforce payment of the charge.
• We will check on the two redress scheme websites to check the recipient of the notice has registered.
• We can impose further penalties if after the first penalty the recipient of the notice fails to join a scheme. There is no limit on the number of penalties that can be applied if the recipient of the notice fails to join one of the schemes.

Appeal process:

The recipient of the notice can appeal against the Final Notice to the First-tier Tribunal. The appeal must be made within 28 days of the day on which the final notice was sent and details of how to make an appeal are detailed on the Final Notice.
 
Maximum Penalty charge: £5000 per offence.

Government guidance is that this is the norm to charge and only in extenuating circumstances will a lower level of penalty be applied.

The penalty can be recovered on the order of the court, as if payable under a court order by any of the following:

• Bailiffs
• Obtaining an attachment of earnings order.
• Taking money that the recipient of the notice is owed by someone else from their bank account (a third-party debt order)

Securing the debt against any property that the recipient of the notice owns (a charging order) For more information on our enforcement approach see our Private Sector Housing Enforcement and Civil Penalty.

We will have reference to the published guidance in taking our enforcement action NALS Effective Enforcement in the PRS Guide 2016