The Redress Schemes for Letting Agency Work and Property Management Work (Requirement to Belong to a Scheme etc) (England) Order 2014 (“the Order”) came into force at the end of Summer 2014, introducing a requirement for property management companies to be members of a government redress scheme.  The Order allows consumers of property management services to complain (ranging from poor service or rudeness to inappropriate retaining fees) to the relevant ombudsman if their complaint has not been adequately dealt with by the businesses own complaints procedure.  The proposed remedies range from a simple apology to fines of up to £25,000.

The difficulty with the Order comes for landlords who have any residential property on their portfolio and who also manage their own properties and employ a sub-contractor to carry out work.  

The definition of “property management work” (contained in a separate piece of legislation) is ambiguous.  One of the interpretations of the definition is that it applies to managing agents and those landlords who simply receive notification from their tenant of a maintenance problem and arrange for the maintenance work to be done by a sub-contractor. 

The Ombudsman has confirmed that the intention of the legislation is to catch managing agents only.  However in the absence of government guidance on the topic, it is up to the Local Authority to decide how to enforce the Order.  Therefore there is a risk that the application of the Order between Local Authorities could differ, depending on their interpretation of “property management work”.  The government is due to produce guidance on the Order shortly.

Readers should wait for the government to produce its guidance on the Order and for confirmation of what type of businesses the intended targets are.  If readers have received a letter from their Local Authority in the meantime and do not think they should be caught by the Order, they should contact Mills & Reeve or the Ombudsman for further guidance.