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Ombudsman: Lettings disputes growing as market changes

"I am surprised that my workload in sales disputes has not reduced more significantly," Mr Hamer said. "Perhaps it shows that buyers and sellers have still higher expectations of agents’ service whilst there are so few properties being sold."

While sales activity dwindled, the rise in the residential lettings market saw a 200% increase in the lettings disputes handled by the OEA and Mr Hamer predicts that during 2009 lettings will become the major area of his activities.

"Lettings agents still only join the OEA on a voluntary basis and it is therefore satisfying to see so many firms opening up access to my scheme for their customers. Those firms will be operating in accordance with the standards laid down in the OEA’s Code of Practice," he said.

The Ombudsman also revealed that in 2008 he made the highest ever award to a complainant in the 20-year history of the scheme, with the estate agent involved ordered to pay out £23,880 after conflicting advice had been given by staff and the agent had failed to act in the best interests of the client or negotiate effectively.

Of the total, Mr Hamer awarded £1000 to cover the distress, aggravation and inconvenience suffered by the complainant – the rest was an award to recompense for indentifiable financial loss. The maximum award he can make under scheme rules is £25,000.

Mr Hamer said he received 1043 new cases in 2008, split between 743 for sales and 300 for lettings, an increase of 20% over 2007 but 78% compared with the same figure for 2006. In 65% of cases the complaint was upheld, resulting in awards totalling more than £385,000. The majority of awards were for between £100 and £499 but 18 were for amounts above £3000.

There is still much confusion between redress as offered by an ombudsman scheme and regulation, Mr Hamer said. Many people mistakenly regard him as a regulator of estate agents but his purpose is to resolve disputes between agents and consumers and to award compensation to the complainant if that is called for, although he also has a role in influencing best practice within the industry.

However, Mr Hamer said that, while he is not a regulator, he does have the means to take action against estate agents through the OEA’s Disciplinary and Standards Committee where there is a clear need and it is shown that an agent’s failure in one case could lead to other consumers being put at risk. During 2008 he referred 21 cases to the DSC, 16 involving sales and the rest lettings.

Talks are now under way with the Association of Residential Letting Agents to bring all its members within the scope of OEA.

At the same time, the OFT is also being asked to recognise the OEA lettings Code of Practice under its Consumer Codes Approval Scheme which will ensure consistency in the standards of services delivered across both the sales and lettings markets. It would also mean that both OEA Codes had received independent scrutiny and accreditation, enhancing their credibility for consumers.

Responding to industry calls for the OEA to give up ownership of its Codes of Practice, Mr Hamer sees it as more important that OFT accreditation of the codes is retained rather than who owns them.

“Given that around 95% of estate agents’ offices are operating to the OEA Code I also think it would create confusion if a separate industry Code were to be drafted," Mr Hamer said.

But he does think an independent body could do much to promote awareness of the house buying and letting processes, areas where there is still a great deal of confusion among consumers, and this body could also seek to promote professionalism within the industry.

He also backs a licensing or registration scheme such as that recently proposed by Bill McClintock, chairman and chief executive officer of the OEA operating company. Mr McClintock is now setting up a steering group to get his registration plans off the ground.

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0 thoughts on “Ombudsman: Lettings disputes growing as market changes

  1. Jayne shilleto says:

    I am in dispute eith a letting agent whose company also sells houses. The agent has not joined the tpo scheme as he says it is voluntary for letting agents. Should he have joined it by law as he sells houses as well.



  2. Hi Jayne, the scheme is sadly still voluntary, however any good agent will have joined and will comply with the strict code of practice. I wrote an article a few months ago on this topic which is still relevant if it is of any interest. http://www.marshandparsons.co.uk/20090318238/market-comment/the-importance-of-a-regulated-estate-agent/.
    If they are a member of ARLA you could also log a complaint with ARLA for them to review. I wish you the best of luck with the dispute.
    Emilie Thysse