One of the key parts of the Renters Reform Bill is the introduction of what the White Paper called a “single government-approved Ombudsman covering all private landlords who rent out property”. It will be compulsory for all landlords to be a member of the PRS Ombudsman scheme, regardless of whether they use a managing agent.
Although the PRS Ombudsman will play such an important role in the future PRS, it’s difficult to figure out what its role will be and how it will function. The Renters Reform Bill has little in the way of detail, and the government has said that the detail will follow in regulations. That said, Jacob Young (Junior Minister) said that it will be administered by the Housing Ombudsman Service, which currently provides ombudsman services for social housing.
However, I’ve pulled together the snippets of information about the PRS Ombudsman into this blog post and will update it when we learn more.
>> Related Post: Renters Reform Bill Hub
>> Related Post: Renters Reform Timetable: What happens when
Quick links about the Private Rented Sector Landlord Ombudsman
What does an Ombudsman do?
Stepping back from the ins and outs of the new Ombudsman for the private rented sector, it’s useful to understand what ombudsmen actually do.
The Cabinet Office issued guidance about ombudsmen in 2022, which stressed they must be truly independent, fair, effective, open and transparent and accountable. They should be user-friendly and free to the complainant, who shouldn’t need legal representation, with the intention of providing “a level playing field between the individual complainant and organisations”.
Ombudsmen protect consumer rights by providing an alternative to the court system. They’re independent, and typically enable consumers to make complaints in a supportive environment, at no cost to them.
They also drive service improvements and advise on “systemic change”, by stepping back from individual cases to make recommendations to improve practices.
What the Renters Reform Bill says about the PRS Ombudsman
Confusingly, clause 24 of the Renters Reform Bill refers to “Landlord redress schemes” in the plural, and doesn’t use the term “Ombudsman”.
However, clause 24 defines it as a scheme which “provides for a complaint made by or on behalf of a prospective, current or former residential tenant against a member of the scheme to be independently investigated and determined by an independent individual”. Residential tenants are tenants who rent a property under a Housing Act 1988 assured tenancy (as amended by the Renters Reform Bill) which isn’t social housing.
In other words, the Renters Reform Bill will enable people who are looking to rent, currently rent, or did rent in the private rented sector to make a complaint direct to the PRS Ombudsman, instead of to their council or to the courts.
If landlords don’t join the Ombudsman, local councils will be able to take enforcement action against them. This will range from a civil penalty of up to £5,000, through to a £30,000 fine or criminal prosecution. There is also the potential for a Banning Order for repeat offenders. The First-Tier Tribunal will also have the right to award a rent repayment order for “continuing or repeat breaches” of the Ombudsman, and government amendments at the Committee Stage added this sanction to Section 40 of the Housing and Planning Act 2016.
Pre-tender Market Engagement: PRS Landlord Ombudsman
In February 2023, a few months before the publication of the Renters Reform Bill, the government issued a Pre-Tender Market Engagement document to gather ideas from interested parties about how to set the new PRS Ombudsman” in preparation for the potential procurement of a Supplier”. The actual tender process for the procurement is likely to take place after Royal Assent.
Detail in the document reveals the detail of what the Ombudsman might look like for landlords. The “minimum” service level is to “provide conciliation and arbitration services to resolve tenants’ complaints” and “resolve 100% of non-complex cases in 90-days”, thereby “reducing the risk of disputes escalating to court”.
The document says that the key objectives of the PRS Landlord Ombudsman is to ensure that “landlords are correctly meeting their obligations when renting to tenants, improving property standards, supporting security of tenure and reducing the risk of disputes escalating to court or resulting in the end of a tenancy prematurely”.
In the subsequent Q&A to bidders, DLUHC confirmed that the PRS Landlord Ombudsman won’t be involved in landlord licensing,and they are considering “how the PRS Landlord Ombudsman and Private Rented Property Portal might interact”.
Who can tenants complain to if the landlord uses a letting agent?
Government guidance explicitly states: “Tenants should be able to seek redress against a landlord when the landlord is at fault, regardless of whether a managing agent is used.”
If a landlord outsources property management to a letting agent, the tenant will have the choice of complaining to the letting agent’s redress scheme if the letting agent breaches the rules of the letting agent redress scheme and the PRS Ombudsman if the landlord is in breach of their legal obligations.
Let’s take the example of a letting agent ignoring a request to repair a broken boiler for an extended period in the middle of winter, which is potentially a Category 1 HHSRS Hazard, and both a statutory repairing obligation (section 11 Landlord and Tenant Act 1985) and a breach of safety regulations (Housing Health and Safety (England) Regulations 2005).
Clause 15b of The Property Ombudsman’s Code of Practice for Residential Letting Agents says: “You must respond promptly and appropriately in the circumstances to reasonable communications from landlords and tenants or any other authorised or appropriate third party, particularly where these relate to statutory repairing or maintenance obligations or safety regulations”.
If a letting agent doesn’t respond promptly or appropriately, the tenant can complain first to the letting agent, and then onto the agent’s redress scheme if the tenant is unhappy with the outcome of the complaint, or if the agent doesn’t respond within 8 weeks. As the landlord will also be in breach of their statutory duties, the tenant will be able to complain to the PRS Ombudsman.
In other words, even if a landlord uses a letting agent, a tenant will still be able to complain to the PRS Ombudsman. This is because it’s not a defence for a landlord to blame the letting agent for the inaction. The buck still stops with the landlord when it comes to their statutory obligations for repair and to comply with safety regulations.
The redress scheme and the PRS Ombudsman would therefore have overlapping jurisdiction for the same failure to repair a boiler within a reasonable time.
There will be other instances where the PRS Ombudsman will be the only choice for tenants. For instance, if a landlord turns down a request to keep a pet.
>> Related Post: What are landlords’ obligations to carry out repairs?
Government announcement about PRS Ombudsman in Committee Stage
During the Committee Stage of the Renters Reform Bill, Junior Minister Jacob Young, gave an indication of the “direction of travel” for the ombudsman, that the Housing Ombudsman Service (currently the Ombudsman for social housing) would administer the ombudsman service for the private landlords:
Our preferred approach at this time is for the existing housing ombudsman service to administer redress for both private and social tenants. As an established public body already delivering redress for social tenants, the housing ombudsman is uniquely positioned to deliver the private sector landlord redress scheme. Having one provider for all social and private renting tenants would provide streamlined and simple-to-use redress services for complainants. […]
The intention is to approve a single ombudsman scheme that all private landlords will be required to join.
This means that the PRS Ombudsman will not be combined with either of the redress schemes for letting agents, and there will be one place for tenants to go to in order to complain about a landlord, whether it’s private or social.
Shadow Housing Minister Matthew Pennycook supported this decision, saying: “We would welcome the Government’s preferred approach—for the housing ombudsman to take on responsibility for the private rented sector. The Landlord and Tenant Act 1985 does not distinguish between tenures, and we think that the ombudsman is probably best placed to provide that service and to do so quickly”.