LAST UPDATED: 18 April
The Renters (Reform) Bill outlines the government's plans to introduce a new ombudsman that all landlords must join - regardless of whether they use a letting agent.
In April 2024, the Government proposed new amendments Renters (Reform) Bill in preparation for its third reading in the House of Commons, which will likely happen at the end of April.
All amendments to the Bill, including more clarification on the Property Ombudsman have been signed off by Michael Gove, Secretary of State Levelling Up, Housing and Communities.
The Renters (Reform) Bill was passed by the House of Commons in April 2024. It has now entered the House of Lords, but it is not clear when the bill will go through Royal Assent.
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Here is everything letting agents and landlords should know about the new property ombudsman and how it may affect the future of the lettings industry:
Ombudsmen or redress schemes are set up to help protect consumer rights. They aim to provide "fair, impartial, and binding resolutions" without needing to advance the problem to court.
Using an ombudsman should therefore be faster, cheaper and easier than going through the court system.
Currently, there is a redress scheme for agents to help settle disputes with tenants, but no similar scheme for landlords. This means that if a tenant has a complaint, their agent may be reliant on remedying that complaint on behalf of a landlord who does not want to engage.
It will be mandatory for all private landlords to join the scheme, whether they use an agent or not. This will give tenants access to redress services in any situation, while landlords will be accountable for their own conduct and responsibilities rather than the agent.
The government has not yet decided which organisation will be in charge of the redress scheme. It has stated its intentions to only approve one scheme, and for it to act as an ombudsman.
By using only one scheme, landlords and tenants will be able to access the same service. Letting agents will not be required to join this ombudsman scheme, as there are already two redress schemes in place.
In April 2024, amendments to the Renters (Reform) Bill suggested that the Secretary of State can appoint the new ombudsman on such terms they deem fit. The Secretary of State can also remove the ombudsman at any time, regardless of whether the scheme is administered by a corporate body.
Delegations for the property ombudsman must be given in writing and can be varied or revoked at any time by the Secretary of State. However, this doesn't prevent the Secretary of State from exercising these functions themselves.
It was also stated in the April 2024 amendments that the appointed property ombudsman will not be a servant of the Crown, and will not have any specific status, privilege or immunity from the Crown during this role.
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The ombudsman will be a streamlined service for both landlords and tenants to use. It will be able to resolve individual disputes between landlords and tenants without involving the courts.
According to the Private Rented Sector Ombudsman guidance, the government aims for the redress scheme to also "tackle the root cause of problems, address systemic issues, provide feedback and education to members and consumers, and offer support for vulnerable consumers."
Letting agents will not be required to join this ombudsman, as many are required to be members of existing redress schemes. Asking agents to join the scheme would also “risk disruption” to the government’s deadlines.
Tenants will be able to seek redress for free if they have a complaint about their tenancy. Legitimate complaints could be around their landlord's behaviour, property standards, or repairs that haven't been completed within a "reasonable" timeframe, for example.
The ombudsman will be given powers to "put things right" for the tenant, such as "compelling landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to ÂŁ25,000."
Landlords also may be required to reimburse rents, if the property doesn't meet the right standard.
The redress scheme will be given powers to "put things right" for the tenant. This includes compelling landlords to:
Landlords also may be required to reimburse rents, if the property doesn't meet the right standard.
If landlords don't comply with the ombudsman's decision - especially for repeat or serious offenders - they may be liable for a Banning Order.
The ombudsman's decision may also be enforced through the courts, if the landlords' compliance becomes "a concern".
Landlords will not be able to make a complaint about their tenants. However, the government says it is “exploring the possibility [...] to offer mediation services to landlords” to help settle disputes.
The government states that landlords will also benefit from the scheme by benefiting from training, guidance, and support.
The government commits to introducing the ombudsman “as soon as possible after Royal Assent.”
It usually takes about a year for a Bill to go through parliament and to become law. However, Housing Secretary Michael Gove told the BBC in May 2023 that he is committed to seeing the Bill go through parliament "as quickly as possible."
The third and final reading of the Renters (Reform) Bill will likely occur at the end of April 2024. Once it has passed through the House of Commons, it will then move to the House of Lords before receiving Royal Assent. It is unclear how long the Bill will take during this period.
Please note this is intended as a guide only and is not exhaustive. Read more about the proposals at bills.parliament.uk.