Out-Law News 2 min. read

Housing dispute resolution proposals will impact developers

Plans for a new dispute resolution mechanism available to all tenants and leaseholders in England have been published by the government.

All private sector landlords will be covered by the new Housing Complaints Resolution Service, including providers of student accommodation and developers building new leasehold homes. They will also be subject to a new legal requirement to join a redress scheme.

Planning law expert Sue Chadwick of Pinsent Masons, the law firm behind Out-Law.com, said that the proposals could be "quite onerous" for landowners and developers.

"The government is clear, for instance, that the requirement to be a member of a redress scheme cannot be delegated to a managing agent," she said.

"It may have taken the government nearly a year to get this far from its initial consultation on its consumer redress in the housing market, but it is further evidence that politicians are not just concerned about the private rental market but are ready to do something about it. Recently, London mayor Sadiq Khan asked Karen Buck, the MP for Westminster North, to work with the deputy mayor for housing on proposals for rent controls across the whole of London," she said.

Currently, several different complaints bodies and redress schemes operate in different parts of the housing market, while others are not covered at all. For example, there is currently no obligation for private sector landlords to register with a complaints system. The government's view is that the existing system is "fragmented" and confusing.

In response, it is proposing to establish a single housing complaints service, available where 'in house' routes have been exhausted, which it is calling the Housing Complaints Resolution Service. This service will be developed by a new redress reform working group made up of representatives from across the sector, working with industry and consumers. The government may also legislate to require providers to clearly support and signpost consumers wishing to complain, if it is unable to agree voluntary measures.

The government will legislate to require all private landlords to become members of a redress scheme, with a fine of £5,000 if they fail to do so. This duty will extend to all freeholders of leasehold properties; all private rented sector landlords; developers of new-build homes; residential park home site operators; and private providers of purpose-built student accommodation. The onus for compliance will rest with the landlord, regardless of whether it employs a managing agent.

A New Homes Ombudsman, underpinned by legislation, will also be established. Its role will be to protect the interests of home buyers and hold developers to account. All developers of new-build homes will be required to participate, and will be required to do so by 2021 if they wish to participate in the government-backed Help to Buy scheme. The office will be set up on an interim, voluntary basis before it is fully operational, according to the government's consultation response.

The proposals apply to the private sector only, as redress for social housing residents is being considered as part of the government's wider programme of reform for the sector. It is due to publish a response to its social housing green paper and review of social housing regulation in the coming months.

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