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Consumer disputes in the housing sector: a long-awaited reform

Consumer access to remedy has long been a neglected part of what many consider to be an already broken housing market. Housing disputes are heard in a number of different legal settings and the process is often convoluted and opaque. As a result, this vulnerable part of the real estate sector (private renters, social housing residents, leaseholders and buyers of new build homes) can face insurmountable barriers in bringing their cases to justice.  Following a White Paper on the topic in early 2017, and a consequential consultation, the Secretary of State for housing, communities and local government published his response to the issue at the end of last month.  The response sets out a number of proposals for reform.  Although a number of programmes are envisaged, the predominant feature consists of a single, accessible portal which will streamline disputes by referring complaints to the appropriate ombudsman, whilst maintaining the various specialisms needed in this area.

The government has highlighted three key sectors that will be impacted by the reform: the private rented sector; leasehold properties and new builds.

Compulsory membership and justice without courts

The government wants people to be able to access help in resolving housing complaints without needing to apply to the court system The government is going to introduce legislation which will require all private rented sector landlords, regardless of whether they employ a managing agent, to be part of a scheme for remedying complaints.  Notably, this includes all private providers of purpose-built student accommodation.  As for developers of new build homes, the government is also proposing to bring forward legislation that will require all developers of new build homes to belong to a New Homes Ombudsman.  These enhanced requirements for developers fulfil the government’s promise to “champion homebuyers” and protect their interests.  It is anticipated that failure to comply with the legislation will result in fines of up to £5,000.

Helping consumers find resolution

The obligation to belong to such a scheme only addresses part of the issue. What became clear during the consultation was that the multiplicity of schemes currently available is creating confusion, which deters people from actually bringing forward their complaint.  This is where the proposed Housing Complaints Resolution Service will come into its own: a new single access portal where help will be available in resolving complaints or disputes with their landlord, property agent or developer.  This service will be available for social housing residents, tenants and buyers of new build homes.

On-going consultation

A new Redress Reform Working Group will examine and critique the existing standards for dealing with housing disputes and publish voluntary guidance on how improvements can be made. Any particularly pertinent pieces of guidance can then be consolidated through legislation or regulation.  The ultimate goal is to produce a comprehensive “Code of Practice” which will cover the entire housing sector.  Expectations for how complaints are handled will be clarified and set out in a format that will be readily accessible for everyone.

With the proportion of households in the private rented sector having doubled over the last ten years, these reforms look to be timely. The aim is to speed up the rate at which cases are heard and to create a more accessible justice system for everyone.  It remains to be seen whether these new reforms will have the positive impact hoped for, or whether in practice this will be harder to achieve.