Property Redress Scheme

Annual report 2021

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Foreword
By the Lord Palmer of Childs Hill, Chair of the PRS Advisory Council

Welcome to the Property Redress Scheme's annual report 2021. The report reflects on yet another tumultuous year as we come to terms with a complex combination of international crisis and the economic challenges of energy price hikes and inflation.

These have impacted on the record high house prices we are seeing, whilst stock has fallen dramatically; a booming rental sector, but with rising rents is putting pressure on tenants who are already seeing their living standards falling. This is not withstanding the challenges of the residential property management sector which is coming to terms with building a safety regime that has emerged out of the cladding crisis. On top of this we have the challenges of meeting ambitious but essential targets for carbon reduction.

There are quite a lot therefore on the plate of property professionals, however, according to the statistics in the report, this has not  led to more complaints and penalties. Despite continuing to grow and provide redress for even more customers of our agents, the professionalism in the sector appears to be improving.

This said, there are a lot of changes in the pipeline that will if correctly implemented have a really positive impact on the standards in the sector. It will be an interesting year ahead!

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Head of Redress report
Sean Hooker, Head of Redress at the Property Redress Scheme

When the Property Redress Scheme came into existence a little shy of eight years ago, few could have predicted the dramatic changes to our sector. Property is now at the front and centre of our country’s challenges and will continue to be whilst demand outstrips supply for all tenures and the issue of the roof over your head is one that occupies a major concern for many people.

Lord Palmer has eloquently summarised the daily factors that are shaping our sector, so I will look at the impact this has had on the complaints we have dealt with over the last year.

The figures contained in this report speak for themselves and I hope you find the interactivity and presentation of the statistics interesting and useful. I will therefore touch on some key indicators and my predictions for the future.

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What happened in 2021?

The sales boom will peter out as the housing stock fuelling it falls

The sales boom will peter out as the housing stock fueling it falls.

The predicted frustration with market flurry caused by the stamp duty holiday never really materialised in huge numbers of sales related complaints that came across our desks, however the shortcomings of the house buying and selling process were exposed and reform to improve the process is needed now more than ever. The upcoming challenge for the sector is the lack of supply and the aggressive price rises in almost all parts of the UK.

Previous experience has shown that in such markets, shortcuts tend to be taken and due diligence by consumers falls. This is why the work the sector is doing to ensure the material disclosure of information at the beginning of the process is given to buyers is so important. The requirements, albeit on a voluntary basis, to provide upfront information on portals and the increasing use of the buying and selling information pack is an important step forward and an example of the sector taking responsibility for change before the Government makes it compulsory.

Lettings on the cusp of dramatic reform

Lettings on the cusp of dramatic reform.

Renting remains our largest sector and accounts for most of our complaints. This said, we closely monitored the impact of Covid on complaint numbers and types and there were not dramatic rises in the volumes. Whilst total notifications increased, so had our agent base and therefore the rise was to be expected.

Landlords and tenants continued to raise complaints in almost equal numbers during 2021 and there has been a small increase in certain types of complaints, such as misrepresentation due to virtual viewings, delays in repairs on the tenant side and lack of inspections and other service issues on the landlord side. The only large increase of complaints relates to rent to rent arrangements. Many of these businesses struggled during lockdown and the increase of rent arrears that resulted during the pandemic led to a lot of problems.

The big challenge for the lettings sector this year will be the reforms relating to regulation and the new environmental and habitation standards being introduced in the very near future. One of the changes in the pipeline is mandatory landlord redress. Learn more about landlord redress here.

Residential lettings management – reform or revolution on the horizon

Residential lettings management – reform or revolution on the horizon

Leasehold issues account for our most complex and entrenched complaints and whilst numbers have not increased dramatically, they do present the most challenging cases we deal with. The awareness of leaseholders' rights and the high profile of current issues in the sector is leading to a rise in cases. We signpost the majority of these cases to the Tribunal, however, the emotional capital invested in the ones we deal with is huge. The new reforms and the resurrection of commonhold will make a difference to the sector in the long term, however for now, landlord redress is only a small part of the solution. I will continue to work with others in the industry to make a difference.

A strong team and sector support

A strong team and sector support.

I have been privileged to have had a first-class team of people around me, they have taken the challenges of disrupted working practices, embraced flexible working and the vagaries of virtual working. The team have also worked hard to improve and enhance what we do at the Property Redress Scheme. We are resolving more cases before the formal stages of the process and have seen an increase in quicker resolution times when they have had to go through the whole process.

The introduction of PRS Tenancy Mediation and letting agent helpline, HF Assist were to support both our agents and their consumers and have provided significant added value. My team have updated our existing resources for both agents and consumers and added new content such as guides, forms and case studies. The resources are now clearer to understand and easy to access, we will continue to enhance these over the next year.

I have also had the support of my advisory council, who were there whenever they were needed even though we were unable to meet in person last year. I continue to work with them across all parts of the sector to raise standards and prepare for the forthcoming changes. We are masters of our own destiny if we are prepared to step up and embrace what is happening. And on that basis, I see great opportunity and a bright future for the industry and market going forward in 2022 and beyond.

Membership stats 2021

The Property Redress Scheme has continued to grow in 2021. In our seventh year, our membership grew to over 16,000 agents with a further 1,250 registered branches throughout the UK. Membership numbers rose by 8.9 per cent, from 14,932 in 2020 to 16,272 in 2021.

We offer three membership models to give our members the choice of a model that suits their needs. The three membership models are:

The majority of our members use the entry model membership (71 per cent), just over 27 per cent of our members choose the enhanced model and only two per cent are residential leasehold management model members.

Our membership also comprises private landlords and corporate landlords (791 members) who have voluntarily joined our scheme, before the Government makes landlord redress compulsory. Learn more about our landlord redress pilot with the National Residential Landlords Association in this report.

In terms of type of work undertaken, 81 per cent of our members are letting agents, 44 per cent are sales agents and five per cent are property professionals with the vast majority being corporate landlords with some inventory clerks, educators and relocation agents.

Geographically speaking, 33 per cent of our members are based in London. This is followed by members in the South East (12.7 per cent) and the North West (9.7 per cent). There have been 46 agencies expelled from the scheme, 41.3 per cent of which are based in London, 13 per cent in the East of England and 10.9 per cent in the South East.

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London

Members: 5064
Expelled members: 19

East Midlands

Members: 859
Expelled members: 4

East of England

Members: 1165
Expelled members: 6

South East

Members: 1893
Expelled members: 5

South West

Members: 1018
Expelled members: 0

Wales

Members: 527
Expelled members: 0

West Midlands

Members: 1082
Expelled members: 3

Yorkshire and The Humber

Members: 999
Expelled members: 1

North East

Members: 434
Expelled members: 3

North West

Members: 1517
Expelled members: 3

Northern Ireland

Members: 329
Expelled members: 0

Scotland

Members: 408
Expelled members: 0

North East

Members: 434
Expelled members: 3

Complaint stats 2021

Our priority is to resolve complaints between consumers and our members. Where possible we always encourage our members to engage in open communication with consumers to avoid complaints. However, unfortunately complaints are sometimes inevitable.

Complaints raised

In 2021, complaints raised increased by just 2.4 per cent (1,872) compared to 2020 (1,828).

This is a sizeable net reduction when the substantial increase in the number of 2021 UK property transactions is factored in.

This means that we had the equivalent of just one complaint for 11.5 per cent of our members in 2021.

Complaint resolution time

The past year has had an impact on the industry following Covid, however we have been able to keep our average time taken to resolve complaints from the complaint being raised to closed at under 50 days.

For lettings and sales complaints, our average resolution time was 48 days and for residential leasehold management complaints, 52 days.

Early resolution

With early resolution, our sole focus is to understand the root cause of the complaint. We’ve introduced this step for every complaint, which allows all parties the chance to settle before needing a formal written decision.
 
We take the time to understand the position, assess the evidence and with our expert industry knowledge, engage with both sides to facilitate a positive outcome for all parties. This increases the number of cases solved by early resolution.

In 2021, 57 per cent of our accepted cases were resolved by early resolution conducted by case assessors.

Early resolutions in 2021 resulted in a total of £239,364.86 in suggested settlements for consumers, 117 per cent more than 2020 (£110,143.77).

Decisions

This year, we issued 27 per cent more proposed and default decisions than in 2020.

The total figure awarded over proposed cases was £351,212.21, an increase of 104.8 per cent from 2020. And an average of £1,012 per award

Due to the work on early resolutions and proposed decisions we are not required to carry out many final decisions, but in 2021 we had a 55 per cent increase as more decisions were reviewed. Default decisions awarded a further £111,850.77 to consumers.

Sell

Easy to sell

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Fast process

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On all marketplaces

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In lettings, the top reason for complaints revolved around in-house complaint handling. The next highest was rent, and joint third highest was general communication and fees and charges. The top reason for complaints in sales was misleading or incorrect information. In residential leasehold management, maintenance issues were the most common causes of complaints.

In 2021, we supported our members by continuing to promote our early resolution service and helping them to reduce the number of complaints they receive themselves. We believe the best way for them to do this is to listen, and to talk to the experts.

What were the top three complaints?

Lettings

1. Duty of care
2. Instructions and terms of business
3. Tenancy agreement, inventories and deposits

Sales

1. Marketing and advertising
2. Instructions, terms of business, commission
3. Deposits

Property management

1. General communication
2. Maintenance
3. Service contract tendering/management

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Compliance report 2021

At the Property Redress Scheme, we take our responsibility to help raise standards in the property industry seriously. And at times this means we need to take strong action against rogue agents.

Most of our members are compliant with our decisions, compliance with our decisions has increased from 78 per cent in 2020 to 87 per cent in 2021. This means that almost 9 in 10 of consumers received the full amount they were owed.

When rogue agents do not comply with our decisions we work closely with the National Trading Standards Estates, Letting Agent Team and local Trading Standards to take robust action. This has resulted in 46 members being expelled in 2021 (two more than 2020) and our biggest award was at our limit of £25,000. The majority of expelled agents are based in London (41.3 per cent), 13 per cent are based in theEast of England and 10.9 per cent in the South East.

We will continue to work closely with The National Trading Standards Estate and Letting Agency Team to improve standards in the property industry.

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The advisory council

As the Property Redress Scheme turns eight in 2022, we have decided to update an element of our governance. The advisory council, who have been in place since we launched in 2014 will be replaced by an advisory panel. This advisory panel will be made up of experts in the property industry covering the following membership areas:
Lettings, sales, residential leasehold management, property sourcing, property education, rent to rent and inventory.

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We will also have representatives that cover:
Parliament, trading standards, landlord, tenant and general consumers.

With the Property Redress Scheme covering multiple areas of work in the property industry we have decided to address our needs differently with a wider and more diverse panel of industry experts. We will have a specialist covering each area who we will work with both for information and guidance but also to assist in improving and enhancing standards in their chosen areas.

Throughout the first half of 2022 we will be announcing the new members of the panel who will be representing each section. And an annual round table will be held with the advisory panel to discuss and debate relevant trends and developments in the industry.

Our heartfelt thanks are given to the outgoing advisory council members who have supported and assisted the development of the scheme over the last eight years.

Lord Monroe Palmer
Chairman of the Property Redress Scheme

Monroe Edward Palmer, Baron Palmer of Child's Hill, OBE, FCA is a British Liberal Democrat politician. A member of the House of Lords since 2011 and Chairman of the Property Redress Scheme advisory council. Lord Monroe Palmer currently speaks on international affairs, local government, and taxation.

Alex Cosgrove
Trading Standards  

Alex is the CTSI Lead Officer for Trading Standards with nine years of experience working in the property and lettings department. Her focus is to enforce the client money protection schemes for property agents and regulations across London.

Nick Lyons
No Letting Go

CEO of the UK's largest franchised property inventory management and property compliance reporting company, No Letting Go and CEO of Kaptur Software, mobile data collecting software for the property industry. Nick is a passionate supporter of the property industry, and his hard work and support shows this. 

Alison Nunez
McCarthy Stone

Alison Nunez, appointed by McCarthy Stone as Multi-Tenure Director with the purpose to lead the company’s new rental proposition, providing retirees with an alternative  option to purchasing or shared ownership. Alison has over 25 years’ of experience in the property industry, specialising in residential lettings.

Richard Price
Experienced landlord

Richard is an experienced multi property landlord, former Director of the National Landlords Association (now NRLA) and current Director of UK Association of Letting Agents (UKALA) which supports over 1000 letting agents across the UK. Richard is a very strong supporter of the Property Redress Scheme.

Tessa Shepperson
Landlord Law

Tessa is a solicitor specialising in residential landlord and tenant law. Working in property law for over 20 years, she brings her experience of private residential law to the advisory panel. Tessa is the founder of online membership service, Landlord Law. Where members can access tenancy documents and ask for legal advice.

Eric Walker
Martin and Co

With over 30 years’ experience in lettings, property management, sales and development, Eric is currently the Managing Director at Martin and Co and is responsible for two regions, South of England and Scotland. Eric specialises on letting compliance, training and supporting complaints in the industry.  

Also thank you to previous advisory council members David Westgate (Andrews), Suzy Hershman (mydeposits) and Paul Shamplina (the Hamilton Fraser Group).

Landlord redress - levelling the playing field

The Property Redress Scheme is delighted to be working with the UK’s largest landlord association, the National Residential Landlords Association (NRLA) on a pilot redress scheme for landlord members and their tenants throughout 2022.

The pilot scheme is free to NRLA members and will provide a route for tenants to have their unresolved complaints dealt with by an independent third party in a confidential and non-confrontational way.

Ben Beadle Chief Executive
of the NRLA

"For some time, we have stressed how important it is that an effective system of redress is established to resolve disputes between landlords and tenants. 

This pilot will give NRLA members the chance to demonstrate their commitment to excellent customer service and play a pivotal part in the development of an effective redress scheme in which both landlords and tenants can have confidence.
"

Tim Frome, Director at HF 
Resolution Ltd 

"We are delighted to work with Ben and his team, to provide redress directly to NRLA landlord members and their tenants.

We worked closely with the NRLA to design the pilot and to ensure it is right for both landlords and tenants. Landlords who join us in this pilot will benefit from our experienced and qualified team, who know the sector inside out.  

What we will learn from working with NRLA landlords and the experience gained during the pilot will be vital in guiding the Government when they make landlord redress mandatory.
"

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Find out more

Further information on the pilot scheme is available here on our website.