Sean Hooker: Industry revelations and the renters' reform saga

When it came to me thinking of what topic to cover in my monthly blog, I was conflicted between two important things that I wanted to talk about. The first was the publication of the Property Redress Annual Report and the associated survey we conducted into how property agents were feeling in the current climate.

The second topic was what we have learned from the Queen’s Speech about renters’ reform and, in particular, the announcement that the government intends to bring in a property register and redress for all private renters, commonly known as landlord redress.

Rather than choose between the two, I have opted to cover both as there is much crossover in looking at “things that were, things that are and some things that have not yet come to pass” as the Lady Galadriel from the Lord of the Rings would say.

Complaints and rent to rent

In the Property Redress Scheme's 2021 Annual Report, we saw some positive news. Whilst our membership grew - indicating that, despite difficulties the sector has experienced, being a property agent is still an attractive career choice - the number of complaints we received as a proportion were fewer than the previous year and, of those we handled, less complaints were upheld.

This in my mind means that standards are rising and having a redress scheme in place makes a real difference to the quality of service provided.

There were, however, exceptions to this - notably the rent-to-rent sector. This model was severely tested during the pandemic, but also remains a very popular way of entering the rental market and is peddled by often less than scrupulous property gurus selling property investor courses.

The result has meant a good number of naïve and inexperienced people have gone into the market and got their fingers burnt.

The risk in virtual viewings

We also highlighted the risks of material disclosure and transparency, and warned the sector about the risks of depending on virtual viewings as the sole way of showing consumers properties.

Covid restrictions but also the development of more sophisticated tools that have come onto the market have meant an increase of more agents conducting viewings remotely. However, this has led to an inevitable increase in complaints.

One particular case I dealt with involved a tenant arriving at a basement flat he had only seen online and by video, only to discover the ceiling was only a few centimetres higher than he was tall!

The camera can lie, so always offer a physical viewing, especially where there is a serious intention to enter into a transaction and papers are about to be signed.

The future of rental reforms

In terms of what the sector should expect in the future, my report focused on the anticipated reforms across the sector promised by the government.

Some of these reforms had been trickling out and work was already well underway in formulating the change.

However, the bulk of the details are still yet to come out. What we know is that the property sector across the board, sales, lettings and leasehold is set for a major transformation in the next few years.

I had really hoped to reveal more meaningful details about these changes, especially when it comes to letting, as the government had promised to release a White Paper this Spring and I thought that the publication would coincide with my report.

Alas, my optimism was misplaced, and the release date for our report meant it went out with my informed speculation but no real substance on the reforms.

Still “tide and tide wait for no man” and to be fair, my involvement in the consultations and deliberations does put me in a strong position to make educated speculation on what is in the pipeline.

Some legislative surprises still in store

The saga, however, still has some twists and turns before we can say for certain what will actually happen. The latest episode was that the reforms were announced as part of the Queen’s Speech.

My understanding was it was touch and go whether a separate bill would be put forward or they were going to piggyback the changes on other legislation or use statutory instruments to implement them.

It looks like a separate bill will be presented, and the White Paper will attempt to present a good representation of what the final legislation will look like.

I have been told that civil servants are optimistic the White Paper will be out in June and given that spring officially ends on 21st, they might just fulfil their promise.

Pared down promises

It is also interesting that what they have now promised is slightly pared down from what was previously promised.

Gone are lifetime deposits or at least the commitment to deliver them this side of an election but also what is disappointing is no mention or commitment to the regulation of property agents in the form of qualifications, a code and a regulator.

Given that the Regulation of Property Agents (RoPA) report was completed and published over three years ago, and the government has not even produced a response, this will not go down well with the sector, who has been calling for this for an age.

It is interesting, however, that Ministers are making noises that they are still committed to the long-term ambition of regulation, and they will respond to RoPA in due course.

I suspect that this will be alluded to in the White Paper and this along with deposit reform could well be legislated for by delegated powers to the Minister for later implementation.

Government priorities for rental reform

In terms of government priorities and will either be delivered or form part of their next election manifesto, the abolition of Section 21 is top of the pile with the requisite reform of possession grounds.

The rest of the programme Is focused around applying the Decent Home Standard, currently in force for social housing, to the private rental sector. This would be in tandem with a new portal based on the property and its condition. This is essentially a landlord register and will be linked with enforcement.

In addition, they are looking to set up a new Ombudsman for private landlords, with a focus on dealing with repair issues and from what I can gather, could incorporate some form of dispute resolution for end of tenancy issues such as arrears and possessions.

My understanding is that this will be separate to the current redress for property agents, and they are ideally looking for a single scheme, although it has not been spelt out whether this is a single source of access for complainants with common parameters and remits, or whether they are looking for single provider accommodating all of 4.4 million households occupied by private rented tenants.

It has also not been explained how the new ombudsman would interact with the huge number of properties currently let and managed. through property agents and who themselves are members of a redress scheme, although they are not responsible for the obligations of landlords.

Putting the property at the heart of the changes

The direction of travel is to put the property at the heart of the equation, I get it! Properties don’t move or change their entity, and a switch from being managed by a letting agent to self-managed by a landlord does not make a difference to the tenant who wants a safe, secure home.

However, who to hold responsible and who to direct to put things right, will be a crucial part of how this is delivered.

The proposal will have to consider how the different forms of redress work together and how best to resolve complaints, quickly, effectively and cost efficiently.

Landlord redress will need to work with the agents who manage the let and forget and absentee landlords and it makes sense therefore that there is some form of joined up thinking on this.

It will also need to work with the deposit schemes and enforcement agencies, who ultimately are the final arbiters of property standards and best placed to undertake prosecutions and court action.

Will the single ombudsman work?

Joining up all these strands will not be an easy task and I remind everyone that we have been here before when the proposal for a single ombudsman was mooted in 2018 as part of the "Strengthening Consumer Redress in Housing" consultation.

The solution at that time was to look to put in place a Housing Complaints Resolution Service which would be a single point of access that housing consumers can use.

The idea would be that a complainant would only have to complain once and their case would be triaged and directed to an appropriate resolution mechanism or organisation which would deal with the complaint and deliver it via the overarching service.

This would effectively provide the benefits of a single entity for complainants but would not mean having to set up a huge, consolidated organisation acting as judge, jury, and executioner. It could also effectively plug all the gaps in the market and no consumer would fall between the cracks.

Unfortunately, this idea itself withered on the vine as we entered a period of general elections, Brexit and of course the pandemic. The only remnant of the plan that appears to have been taken forward is to create yet another organisation known as the New Homes Ombudsman.

A prototype for this has been appointed and I expect the concept will be enshrined in legislation now the Building Safety Act has received Royal Assent.

It could well be, however, that the concept will be revived and this is why I continued to be part of the Redress Reform Working Group that continued as an informal forum with the existing ombudsman schemes and the First Tier Tribunal could help shape and influence the landscape of redress in the housing sector.

We have been on a long journey, and it is still yet completed, however I’m encouraged that after the long hiatus from when the proposals were announced to where we are now, we are a step further down the path and can start to make a real difference.

I will end on yet another Tolkien quote that I believe is quite apt, but I live in hope a clear road map will soon be available.

“The road goes ever on and on down from the door where it began. Now far ahead the road has gone, and I must follow, if I can.”

Next stop, the White Paper!

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