New routes of redress proposed for tenants and homeowners

Written on 31 Jan 2019

On 24 January 2019, the Ministry for Housing, Communities and Local Government (MHCLG) announced its latest proposals to reform the existing system of resolving housing-related complaints in the private sector.

Housing Complaints Resolution Service

The MHCLG has announced its intention to develop and introduce a Housing Complaints Resolution Service – a new consumer redress service to assist private tenants and homeowners in resolving housing-related disputes. It is set to be developed in conjunction with a new working group that will include representatives from across the property industry and consumers.

MHCLG’s intention is for the Housing Complaints Resolution Service to be a simple, consumer-friendly process for tenants and homeowners, ensuring “disputes can be resolved faster, and people can get compensation where it’s owed“. The service will be appropriate for repair- and maintenance-related disputes, such as broken boilers and cracks in the wall.

A key feature will be the requirement for all private landlords to be registered either with the Housing Complaints Resolution Service, or with an alternative existing redress scheme. The sanction for non-compliance will be a fine of up to £5,000.

New Homes Ombudsman

Separately, MHCLG reiterated its commitment to setting up a New Homes Ombudsman, specifically to handle and adjudicate on complaints brought by buyers of new-build homes. Details of the jurisdiction of the new ombudsman, its powers and commencement date have not been disclosed at this stage. However, MHCLG has stated that residential developers wishing to participate in the government’s Help to Buy scheme must be registered with the New Homes Ombudsman by 2021.

Once the details of the Housing Complaints Resolution Service and the New Homes Ombudsman are finalised, it is anticipated that legislation will be brought forward to give them statutory effect. At this stage, it is unclear whether the Secretary of State will be able to utilise its powers to propose and pass delegated legislation, or if full parliamentary approval will be required (which could delay implementation).

Further details are available here.

Osborne Clarke comment

The recent measures announced by MHCLG are in response to the consultation it ran between February and April 2018 (“Strengthening consumer redress in the housing market“).

Criticisms of the existing framework for redress for housing-related complaints is that it is confusing, bureaucratic and inadequate. Currently, there are multiple consumer complaints and redress schemes for residential tenants – such as the UK-wide Housing Ombudsman – but no legal obligation on private landlords to register with any of them. The Housing Complaints Resolution Service is intended to ensure that all tenants may resolve housing-related disputes through what is intended to be a more streamlined, consumer-friendly service, and save the time and costs of pursuing and defending claims through the courts.

In addition, the New Homes Ombudsman looks to fulfil the need for a fast, informal dispute resolution mechanism for new homeowners, where currently the criticism is that claims in relation to defects are not adequately resolved through the developer or insurer’s own internal complaints process.

The new proposals have been met with broad support across the sector and among consumers. The chief executives of the NAEA and ARLA, the two main associations for estate agents in the UK, have issued a joint statement welcoming the fact that the government is taking a more “holistic approach to redress across the property industry“. The Property Ombudsman – an existing redress scheme – is also supportive of MHCLG’s proposals, and its movement towards “providing consumers with a single, swift and effective route to complain when things go wrong“. From a consumer standpoint, MoneySavingExpert has commented that the introduction of the Housing Complaints Resolution Service and the New Homes Ombudsman represent “a real step forward for private tenants and leaseholders”, but cautions that there remains a wider need for “comprehensive reform of dispute resolution across consumer sectors“.