The Property Ombudsman Newsletter

Dear Members,

First of all may we start by wishing you a
SAFE NEW YEAR

Below, you will find our first update of 2021 which includes; issues raised at our industry and consumer forums, concerns over unlawful Rent to Rent agreements, and an update on what the latest Covid-19 restrictions mean for you.
Finally, if you haven't seen it already, take a look at our Complaint Handling Toolkits

TPO Industry & Consumer Forums

MHCLG
Both forums commenced with an update from MHCLG on the Government’s response to Covid-19, their support package for tenants and landlords and, despite an obvious delay due to Covid-19, ministers’ continued commitment to reforms within the property industry.

Introduction from Rebecca Marsh, Property Ombudsman
New Ombudsman, Rebecca Marsh followed, providing delegates with an insight into what regulation looks like in other sectors she had worked in, while emphasising the Ombudsman’s role of helping to underpin trust and confidence in the sector. The Ombudsman acknowledged the challenges both TPO and the industry has faced as a result of the pandemic, particularly around early resolution of disputes but noted the excellent service being provided by the vast majority of agents. She commented:

“In spite of the pandemic, the number of complaints TPO has received so far this year is greater than last year, reflecting the consumer interest in getting their complaints resolved. However, when set against the number of transactions within the sector, the number of complaints is very small indeed.
“Building on TPO’s previous ‘raising standards’ agenda, I plan to widen this and look at how trust and confidence can be improved within the sector. This is something for all agents to consider and an invitation for me, as an Ombudsman, to get to know those who rarely see a complaint escalated to us.
“Consumers need a vibrant property sector as much as agents want one. As an Ombudsman, it is not just about redress and resolving complaints, it is also about helping the industry improve and improving experiences for consumers. It is important that redress is speedy and that will build confidence.”

Overarching Code Consultation
TPO’s Director of Policy then provided an update on the overarching Code consultation, noting the majority of responses were positive with nearly 500 suggestions and comments in total. The RoPA Code Steering Group will look to provide a full response to the consultation and a final draft of the code in the first quarter of next year. Thereafter, the intention is to hand the code to MHCLG ready for the new regulator once in post.

CPR Guidance - NTSELAT
At the industry forum, NTSELAT discussed their updated CPR guidance, which now includes letting agency work as well as sales, with updated examples and scenarios throughout to help agents understand what constitutes material information. NTSELAT also explained that they are working with the portals to improve material information disclosure on property listings and producing a checklist of compliance for their enforcement agents to use.

Rent-to-Rent agreements – Justice for Tenants
In the consumer forum, Justice for Tenants highlighted how unlawful Rent-to-Rent agreements, which exploit vulnerable tenants, have become increasingly more apparent during the pandemic. Tenants who have struggled to pay rent have fallen victim to unlawful evictions, harassment and properties in disrepair. The advice to landlords was to do their due diligence and ensure they were using a reputable Rent-To-Rent company, as they could be held responsible if the property was used as an unlicensed HMO.

The next TPO Consumer and Industry Forums will take place on 24 February 2021.

Unlawful Rent-to-Rent Agreements

Rent-to-Rent is where an individual or organisation leases the property from the property owner / superior landlord and then rents it out, sometimes on a room-by-room basis which could result in converting communal rooms into bedrooms and installing partition walls, to increase revenue. The full market rent or slightly above is ‘Guaranteed’ to the owner.

Property owners are being incentivised by promises of full market rent, no agency fees, no void periods, and no maintenance costs. The practice is legal as long as minimum legal housing standards are observed, the property has the necessary HMO license and deposits are protected.

However, the reality for tenants in unlawful cases is overcrowding, lack of fire safety features, loss of money and deposits and increased risk of suffering physical and mental health issues. Some tenants who live in Rent-to-Rent properties and have struggled to pay rent during the pandemic have fallen victim to unlawful evictions, harassment and properties in disrepair.

Al Mcclenahan from Justice for Tenants points out that there are many reputable Rent-to-Rent companies in the market which provide an excellent service but landlords must do their due diligence, as they could fall victim to an unscrupulous organised gang and later be held responsible if the property is used as an unlicensed HMO. Agents can play their part too by highlighting the dangers to their landlords. Mr Mcclenahan says “The main issue is that this business model is most successful when operating unlawfully. Criminal gangs are exploiting tenants by offering sub-standard accommodation in overcrowded conditions. The pandemic has brought more of these cases to the fore, as tenants who have then struggled to pay the rent are being unlawfully evicted or harassed for the money. The superior landlord’s name does not appear on any tenancy agreement and is not disclosed to the tenants so if the property falls into the wrong hands, they have nowhere to turn.”

Mark McLaren, Chair of The Property Ombudsman’s Consumer Forum, which meets three times a year to discuss emerging issues giving rise to consumer detriment, says: “Consumers only have access to redress if the Rent to Rent agency is a member of a redress scheme such as The Property Ombudsman. If it is a rogue company which operates as a landlord rather than an agent, it is unlikely to have this safeguard. Furthermore, criminals often set up as Limited companies, providing them protection as the business will shut down and reopen under a different limited company when challenged.

This is not only an issue of great concern for tenants, but also landlords who may struggle to get their properties back and could find them in a state of disrepair when they do.”

Assured Advice for Video Viewings

We have once again made provisions for all staff to work from home. We are continuing to take calls from consumers and to receive new complaints.

We encourage all customers to use our email address admin@tpos.co.uk and consumers to use our ‘Make a Complaint’ that can be found on our Home Page.

We very much acknowledge the limitations placed on agents and consumers, and would wish to emphasise that the priority is for everyone to stay safe and observe government guidelines. [link: https://www.gov.uk/coronavirus ]

When necessary, we will update consumers and agents on a case by case basis and continue to review service provision in these exceptional circumstances.

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