Understanding the role of the Property Ombudsman

Tuesday, March 8th, 2016 - By Katrine Sporle CBE, Property Ombudsman at The Property Ombudsman

The Property Ombudsman (TPO) scheme has been providing landlords, tenants, buyers and sellers a free, fair and impartial alternative dispute resolution service since 1990. More than 27,000 sales and lettings agents are currently registered with TPO which is estimated to represent 95% of sales agents and 85% of letting agents within the UK making it the largest property redress scheme.

On 1 November 2015, I took up the post as the Property Ombudsman.

My remit is to review complaints made against our registered agents and protect consumers from unfair practices. Every TPO registered agent must comply with the latest consumer and property laws, which are set out in the Codes of Practice produced by TPO. Both the Sales and Lettings Codes are independently accredited by the Chartered Trading Standards Institute (CTSI) which means every agent registered with TPO is required to provide additional consumer protection that goes beyond that required by law.

As Ombudsman, I can only review complaints made against registered firms and if the agent is found to have acted unfairly, I will provide redress to place the consumer back in the position they were before the complaint arose, achieving a full and final settlement of the dispute and all claims made by either party. Where appropriate, I have the power to make compensatory awards for actual and quantifiable loss and/or for aggravation caused by the actions of a registered agent.

If a consumer feels they have been treated unfairly and they’ve been unable to resolve the matter with the agent directly, they may have grounds to have their complaint independently reviewed by TPO. Lettings disputes represent the largest number of complaints I see and with more people renting than ever before, I must urge all landlords and tenants to always check that their agent is registered with TPO to ensure they can have their complaint independently reviewed by my office in the event of a dispute.

TPO receives 16,000 enquiries every year and many of the complaints are highly complex where different legal and regulatory factors have to be taken into account to help determine whether I can support a complaint in full or part. An example of a consumer dispute is provided below where a landlord complained about renewal fees.

Complaint

The complainant (the landlord) considered that the renewal fees claimed by the agent were unfair under the Unfair Terms in Consumer Contracts Regulations (UTCCR) 1999 and contrary to the ruling in the OFT v Foxtons case. The agent contended that the fees were contractually due and that their terms and conditions were compliant with the Regulations.

Investigation

Only a court can decide if a particular contract clause is unfair under the UTCCR, regulations that set out what makes a contract term unfair and also provides some examples of terms that are likely to be unfair. This complaint was reviewed against a registered agent as it was felt that they had breached section 5 of the Residential Lettings Code of Practice.

The complainant was also advised that the Foxtons case, which saw the agency sued by the Office of Fair Trading claiming that three of their landlord agency agreement terms were unfair under the UTCCR, did not prohibit agents from claiming renewal fees but rather any clauses relating to such fees to be clearly explained and set out in the terms of business.

With this in mind, the agent’s terms and conditions of business were examined and considered that they clearly set out the basis on which they would claim a renewal fee in respect of the tenancy.

The agent had met their obligations in this respect. However, it was necessary to take into account what was fair and reasonable. In doing so, reflection was taken over the Competition and Markets Authority (CMA) guidance (also referred to by the Complainant). Also taken into account was discussions between the OFT and Foxtons following the outcome of the court case. Accordingly, it was considered that it wasn’t fair or reasonable for the agent to claim a renewal fee indefinitely and not beyond the three renewal fees already paid by the complainant, especially given that the agent had provided a tenant find only service.

Outcome

This complaint was supported. The agent was directed to cease the pursuing of payment for the most recent renewal (in the sum of £1,647.36) and cease claiming any further renewal fees in respect of the tenancy.

Learning

Charging an indefinite renewal fee is no longer an acceptable practice. Agents should be aware that their terms and conditions must reflect the important aspects of the CMA guidance as well as the requirements of the TPO Residential Lettings Code of Practice.

To read in full the TPO Residential Lettings Code of Practice which forms the basis of my ruling’s as Ombudsman as well as all TPO guidance notes please visit: https://www.tpos.co.uk/members/codes-guidance.