Head of Redress reflects on the PRS annual report and what lies ahead for the sector

As a requirement of our approval to run one of the authorised property agent redress schemes, we produce an annual report on our activities.

 

The Property Redress Scheme annual report 2022 summarises what happened in the private rented sector last year and how this has impacted the complaints raised, resolutions and memberships of the Property Redress Scheme. One of this year’s key takeaways is that early resolutions increased by nearly 50%, despite an increase in both membership and complaints, as Sean Hooker, Head of Redress, explains.

 

Being a review of our previous year’s activity, we believe it is important that we account back to everyone as soon after the year end as possible - this year our report was out earlier than ever before. We also believe that we should align our report with the calendar year rather than the accounting year, as we have done previously. This makes our reporting more relevant and compatible with other market data already out there.  

 

This is why, in addition to the statistics we present in detail in the report, we undertook a major survey of the sector to see what the reality is like on the ground. The inclusion of the results of this - the largest sentiment survey of the year carried out across the private rented sector – make for particularly fascinating reading. If you haven’t already, I urge you to take a look at the headlines that come out of it. It’s packed with facts, figures and insights on another turbulent year for the sector, all presented in an interactive and visually engaging format.

 

In this blog, I’ll reflect on some of the key takeaways from the annual report and offer my thoughts on what lies ahead.

 

So, what did we learn in 2022?
 

House prices remain high and are still rising, albeit at a slower pace. Rents are at record levels and demand from tenants huge. However, this is tempered by a worrying fall in housing stock across the board. With increased competition in the agent world only the fittest will survive.

 

Anyone who expected last year to be a quiet one was sorely disappointed. We had a tumultuous year as a country and an industry and we now face a future more uncertain and unpredictable than in living memory.

 

Listen to this episode of The Property Cast for an in-depth discussion exploring the most important trends in the housing market, drawing on Zoopla’s latest data and expertise.


We are now the largest redress scheme in the UK!

We have once again had a year of growth for the eighth year running, increasing our membership by six per cent on the previous year. In one area, lettings, we now have the most individual branches and offices of the two schemes. This is a reflection on the recognition and reputation of the scheme and shows we are established and respected in the sector.

 

How has the economic environment affected complaints and the work of the Property Redress Scheme?
 

Of course, our primary objective is to deal with complainants and last year we handled over 2,000 individual complaints. This represents an almost seven per cent increase on the previous year which, even considering our larger membership, indicates a rise in the average number of complaints.
 

Interestingly, the rate of complaints increased as the year went on and this in my view reflects the changing economic situation and growing uncertainty in the minds of consumers. As reported in Total Landlord’s economic and property market update for 2023, unexpected ‘economic shocks’ almost always drive problems into the market and, rather than returning to a ‘normal market’ after the chaos and uncertainty of the pandemic, the world was catapulted into economic disaster.

 

This sentiment was captured in our survey, where at the beginning of 2022, almost 90% of agents felt that renting offered good value for money for their tenants and over 80% were also happy with their own financial return. By the end of 2022 by contrast, a significant proportion of agents - 70% - said their opinions had changed since, with many citing ‘large rent increases’, the rising cost of living and supply and demand issues as the main reasons for this.

 

It promises to be an exciting time for us and the sector so hang on tight!
 

But it’s not all doom and gloom as we look to the future. We also have one eye firmly on what this year will bring. Our engagement with the Government means I am confident that the long-promised reforms and legal changes will start to be introduced.

 

New lettings legislation in 2023

 

The Government finally released its White Paper – A fairer private rented sector -  and the legislative process to bring this into law will commence shortly. Of course, this does not mean things will change overnight and there should be the opportunity for the industry to transition and prepare.

 

I anticipate that the communication of this will be the major challenge and how the Government handle this will be key to whether agents feel supported. Around a quarter of agents who responded to our survey identified legislation as the biggest challenge facing the sector and would like to see changes. But double this figure  - around half - currently feel very or quite supported by the Government, with around a quarter feeling neither supported nor unsupported and a fifth not very or not supported at all.
 

It is clear that the new regime will incorporate all rental properties and landlords with a register of properties and their condition, and a redress and complaints mechanism for all tenants to access. This will address the lack of consistency we have at the moment, where agents’ issues are dealt with by an accessible, affordable and fast resolution service, while tenants and landlords face the prospect of a lengthy and costly court process.
 

The Property Redress Scheme piloted a landlord redress scheme in conjunction with the National Residential Landlord Association in anticipation of the impending changes and the learnings from this have been shared with the Government. Hopefully they will shape what any future service will look like.

 

For more information on what to expect in the rental market in 2023, watch this video.

 

Improvements to the sales market and changes to material information requirements

 

The plight and general frustration that consumers have to go through in the sales market remains unacceptable, although it’s important to note that the blame for this does not lie with any particular sector involved in the transaction. Thankfully, there is an undiminished drive and determination to improve the buying and selling process.
 

A significant part of this is the strides that have been made in improving up-front and material information to help with the journey, which will have positive benefits for all parties involved. National Trading Standards Estate and Letting Agency Team (NTSELAT) is working closely with the industry to support agents and provides lots of useful information and resources in this article, which also features an excellent infomercial on improving the disclosure of material information in property listings, and what the programme means for consumers.

 

Watch this video for my thoughts on the consumer journey and the leasehold sector.

 

 

Changes to property management and leasehold properties

 

Not surprisingly given the challenges of residential leasehold, some of the most complicated and fractious complaints we receive relate to leasehold property management. Many of the issues we are presented with are directly and legally related to the lease and the obligations of the freeholders who own the buildings. The responsibilities and pressures on property managers are set to increase, but the Government’s radical reform of the leasehold sector and the proposed scrapping of leasehold ownership should hopefully resolve some of these gaps.
 

The fire and building safety changes that have been brought in since the Grenfell tragedy will also remain a big challenge for the foreseeable future and will require a concerted effort on the part of agents to implement correctly. Of course, we are here to support as much as we can and access to an effective complainant resolution mechanism with be a key factor.

 

It's about professionalising the rental sector and raising standards

 

The key focus going forward will be on professionalising the rental sector and raising standards, particularly when it comes to quality and property conditions.

 

Watch this video for my view on the proposed Decent Homes Standard for private rented homes in England, which forms part of the Renters’ Reform Bill, and what it means for agents.

 

 

The challenges of dealing with both a cost of living and an environmental crisis, will quite rightly bring energy efficiency issues to the top of the private rented sector agenda. We have seen how the recent death of a toddler as a result of mould has increased pressure, resulting in campaigners calling for landlords in the private rented sector to be held to new standards, with research indicating that 1.6 million children live in privately rented homes with damp, mould or excessive cold. The Government has announced a new ‘Awaab’s law’ that will set deadlines for social landlords in England and Wales to tackle reported hazards, but the legislation doesn’t currently extend to private landlords. For more information on dealing with damp and mould, read Total Landlord’s guide. I would also recommend you listen to this episode of The Property Cast which contains lots of practical advice for agents from Julie Ford, Adviser at HF Assist and Suzy Hershman, Head of Dispute Resolution at mydeposits and Legal Division Manager (Quality and Customer Engagement) at the Property Redress Scheme.

 

This said, the opportunity to create an early and effective complaint handling service will make a real difference.

 

We are proud that around half of the complainants raised with us are resolved through early resolution – early resolutions awarded increased by 48% in 2022 - which has meant far quicker resolutions of six weeks or less, with a good number being settled in a matter of days. Complaints overall were completed in fewer than 40 days in 2022, compared to 50 days in 2021. This is largely down to our emphasis on providing good quality information and education for all parties who contact us, coupled with our proactive efforts to achieve early resolution.

 

How has the Property Redress Scheme changed?

 

Finally, we have also changed to become even more accountable and I was pleased to be part of a reform of the way we organise our governance. The previous Advisory Council, which was chaired by Lord Monroe Palmer, has been revamped and replaced with a wider and more inclusive Advisory Panel, which will work on various projects to help enhance and improve the service the PRS provides. Lord Palmer will continue to chair this body.
 

I would like to thank the previous members of the council, who served with me over the last nine years and welcome the new members to the new dynamic body.
 

In addition to this change, a new body has also been set up to represent the PRS’s members and customers. Chaired by former PRS council member and leading figure in the sector, Eric Walker, this will allow the scheme to continue to serve the needs of those who use it, while also continuing to innovate and improve the service and delivery of the scheme. The two new bodies will work together to raise standards and professionalism in the sector.
 

Overall, I am proud of all the hard work of my team and the support and cooperation of the vast number of members. While some agents are still not up to standard, this is a small minority, and our highly effective compliance team has worked tirelessly to make sure effective action is taken against them. Last year, 61 agencies were expelled - not all connected with lettings issues - and this represents a one third increase from 2021. This may reflect the current economy but also highlights the quality of our compliance process.
 

I look forward to another successful year and contributing to a safer, more professional and secure sector.

 

See the annual report for the full results of the largest private rented sector sentiment survey of the year, along with more insights into the past year in the private rented sector and the major things on the horizon that property agents need to be prepared for in 2023.

 

And for more tips on what agents should be prioritising this year, read my earlier blog, New Year resolutions – what agents need to do in 2023.