Buy-to-let landlords must join redress scheme or face a £5,000 fine
Government to launch dispute resolution body for homeowners and tenants
The government has announced plans to launch a new Housing Complaints Resolution Service, which will act as a single point of contact for tenants looking to raise disputes against their landlords. Buy-to-let landlords will need to sign up to the service or face fines of up to £5,000. Here, you can find out how the new system could work, and get information on the other regulations facing buy-to-let landlords in 2019.
Landlords must sign up to redress scheme
The government’s new Housing Complaints Resolution Service will be open to homeowners and tenants who have failed to resolve issues directly with their housebuilder or landlord. The government believes that bringing together the various resolution systems currently available will make it easier to gain redress. Housing minister James Brokenshire says: ‘All too often the process [of resolving disputes] can be confusing and overly bureaucratic, leaving many homeowners and tenants feeling like there is nowhere to go in the event of problems with their home.’
Landlords revolt against new proposals
This news hasn’t been welcomed by everyone. The Residential Landlords Association (RLA) claims that little thought has been given to how the system will work in practice, and says the changes will result in higher costs for landlords. David Smith of the RLA said joining a redress scheme ‘will be yet another cost and yet another layer of complexity, possibly with relatively little end product’. He added: ‘We also need clarification on what the situation will be for landlords who use letting agents. Agents already have to be a member of a redress scheme, so landlords using them would be paying twice.’
Current redress options for landlords and tenants
Currently, landlords can opt to become members of a resolution service such as the Housing Ombudsman, but this isn’t required by law. That doesn’t mean tenants can’t complain, however. Many landlords employ managing agents that are registered with industry bodies, such as the Association of Residential Letting Agents (Arla) or the Property Ombudsman, and thus must adhere to a code of conduct and offer resolution services. If a landlord manages the property themselves, it’s a bit more complicated. In such cases, the tenant will need to complain to the council if they can’t resolve an issue directly.
When will the new rules come into force?
These plans are part of a suite of government proposals to improve the avenues of redress available to homeowners and tenants. It’s not yet clear, however, when the rules will come into force. First, they’ll need parliamentary approval – and this could take some time. It’s also unclear how much landlords will need to pay to join the redress scheme, although the government has suggested it may operate a tiered structure rather than a flat fee.
Buy-to-let landlord regulations
This move is the latest in a raft of buy-to-let reforms introduced in the past few years. In addition to buy-to-let stamp duty rates and mortgage interest tax relief reforms, some investors have also seen their profits challenged by the introduction of new House in Multiple Occupation (HMO) rules. Next up is the Tenant Fees Bill, which will come into force in June. Most significantly, this will result in letting agents being banned from charging up-front fees to tenants – thus placing a further burden on landlords, who are likely to have to foot the bill.