Landlords will soon need to register with a compulsory redress scheme to solve tenant disputes, as the government looks to improve standards in the private rented sector.
The announcement came at the Conservative Party Conference last weekend, alongside plans to regulate letting agents and bring in incentives to landlords offering longer tenancies.
The proposals are likely to be firmed up in November’s Budget speech, but in the meantime, we assess the redress schemes currently out there and offer a reminder of some of the other changes landlords need to take into account.
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Landlords must join a redress scheme
Speaking at the Conservative Party Conference, Communities Secretary Sajid Javid said the government would ‘insist that all landlords are part of a redress scheme’.
While no further details have been confirmed, such schemes generally offer legally binding dispute resolution systems and often also require members to adhere to a code of conduct.
The government hopes that by making landlords join an ombudsman scheme, renters will be given greater powers to challenge what they consider to be unreasonable behaviour from their landlords.
Explaining the decision, communities secretary Sajid Javid said: ‘For too long, tenants have felt unable to resolve the issues they’ve faced, be it insecure tenure, unfair letting agents’ fees or poor treatment by their landlord with little means of redress. We’re going to change that’.
- Check out our article on 12 things buy-to-let landlords need to know in 2017 for more information on how changes to the sector could affect you.
Existing redress schemes for landlords and agents
At this stage, it’s unclear whether the government’s plans will involve extending the scope of an existing body or launching a new one.
Currently, there are no fully-fledged ombudsman schemes for private landlords in the market. But a number of voluntary redress and dispute resolution organisations are currently operating.
The Housing Ombudsman Service (HOS)
The majority of members of HOS are social landlords such as housing associations, who must by law join and adhere to the HOS code of conduct.
Private landlords can also become members if they choose to do so, though the HOS’s 2016-17 annual report showed only 71 ‘voluntary’ members.
The HOS closed 15,877 cases in 2016-17, with the majority stemming from assured tenants raising concerns about repairs to their property.
The Property Ombudsman (TPO)
TPO oversees complaints by landlords and tenants against sales and lettings agents.
According to its 2016 annual report, TPO dealt with 1,997 disputes in 2016. Of these, 56% were related to the lettings sector, and a total of £786,572 was paid out by agents as redress.
Overall, 45% of complaints came from landlords and 51% from tenants, with property management, communication, complaints procedures and referencing the most common issues.
TPO welcomed the creation of an obligatory redress scheme for landlords, particularly in light of plans to ban letting fees – it warned the ban may cause less landlords to use managing agents, creating a ‘redress gap’.
National Landlords Association (NLA)
While the NLA isn’t a redress scheme, it does offer a code of practice that private landlords are expected to adhere to, which includes acting in a ‘fair, honest and respectable way’ towards tenants.
If tenants have a problem with a landlord who is a member of the NLA, they can file a complaint to the body, who will seek to rectify the issue and suspend a landlord’s membership if need be.
It’s important to point out that the NLA isn’t a governing body and can’t impose legally binding fines or restrictions. Membership is voluntary, though the NLA currently has over 65,000 members.
Regulations for private landlords
Although these new regulations won’t be coming into force until after the upcoming Budget, it’s a good time to get your head around some of the other recent transformations in the private rented sector.
The table below shows some of the main regulatory changes landlords should be aware of – you can click each heading to find out more about each topic.
|Buy-to-let stamp duty||Property investors and people buying second homes must pay a 3% surcharge on top of normal stamp duty bands.|
|Mortgage interest tax relief||From April 2020, landlords will no longer be able to deduct their mortgage costs from their rental income for tax purposes. Between now and then, the amount they can deduct is being gradually reduced.|
|Wear and tear allowance||Landlords can now only claim tax relief on their actual expenditure when replacing household items, rather than the flat rate of 10% previously allowed.|
|Portfolio landlord lending restrictions||Buy-to-let investors with four or more mortgaged properties now face tougher lending restrictions when remortgaging or taking on new borrowing.|
|Proposed letting fees ban||The government is pressing on with its plans to ban letting agents charging fees to tenants in England. This means landlords would have to pay for the likes of referencing, credit and right to rent checks themselves.|
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