The Property Redress Scheme’s latest list of expelled agents
Aimed at raising awareness and standards in the property industry, our quarterly expulsions update offers some insight into what leads up to the PRS decision to expel a member, following a lengthy disciplinary process. This list of agents recently expelled by the PRS includes an explanation of the facts that we considered when assessing each case, and the outcome, including details of any award made.
The PRS expulsion list:
- Sourced Properties Group Ltd - £8,000 return sourcing fee for rent to rent serviced accommodation:
The complainant paid an £8000 sourcing fee and signed a three-year lease to use an apartment as serviced accommodation. The fee was then transferred to a managing agent who, it transpired, had no permission from the property owner to use the apartments as serviced accommodation. The agent claimed that this responsibility was the managing agent’s and not theirs. The PRS found that there was a misleading omission by the agent, who had not acted with professional care and diligence. The decision awarded the sourcing fee in full.
- NALC Auctions Limited – decision £1,000 + full deposit refund
An auction buyer queried the parcels of land included in an auction lot and was assured that the details provided were correct and complete. After the buyer paid their deposit, it became apparent that some of the parcels included in the lot were not available for sale. The transaction was declared void, but the agent declined the request to refund the deposit. Due to the agent’s lack of care and skill in making sure the parcels were all still available and their false assurances, which caused the buyer to act to her detriment, the PRS decision awarded the full deposit as well as compensation for distress and inconvenience.
- Procured Property Ltd – decision £4,700
The agent gave the buyer several assurances about property surveys, existing tenants and prospective buyers. After paying the sourcing fee and conveyancing fees, these promises were not upheld, as there were no existing tenants, no survey reports and undisclosed repair costs became apparent. Despite assurances that these costs would be reflected in the price, no reduction was offered.
The PRS’s decision also considered the agent’s pressure on the buyer to make a quick decision and pay the fee, saying there was a lot of interest in the property. Due to the lack of due diligence and honesty the agent was instructed to refund the full sourcing fee.
The tenant rented a room from the agent and, when the tenancy ended and the keys had been returned, the agent asked for the complainant’s bank details so the deposit could be refunded. The tenant subsequently chased the payment on several occasions and was assured each time that the deposit would be repaid but it was still outstanding when the complaint was raised with the PRS.
The tenancy agreement was not provided by the tenant, who said it was lost and the agent did not engage with the PRS. With no agreement, the contract terms were unclear. On this point, the tenant was advised to take legal advice on the deposit refund and the potential consequences of non-protection. The PRS’s decision went on to assess the poor service offered by the agent and for this, £150 was awarded for both stress and inconvenience.
The leaseholder terminated his agreement with the agent, who was required to pass on all relevant documents to make the handover run smoothly. The agent provided no audit trail of any documents being sent and frustrated the process by indicating that the freeholder was responsible for collecting the information, which would only be available for sixty days, before being destroyed.
Because the leaseholder received no formal set of accounts or other information requested, the PRS awarded a refund of eight months’ management fees for the period of poor service. The agent was also instructed to provide service charge statements that need to be verified by an accountant and to send the leaseholder a meaningful apology. The leaseholder was signposted to the Property Tribunal for legal issues raised that were outside the PRS’s authority.
Due to non-compliance with this decision and the link between the two businesses and their directors, both this agent and Fountayne Residential Ltd were expelled.
These agents must now face the consequences of being expelled from the Property Redress Scheme. With the memorandum of understanding in place between the two redress schemes, no expelled member can join any scheme until the terms of the Head of Redress’s decision have been settled. This means that property agents who continue to trade, without redress, are doing so illegally and considerable fines can apply.
What happens after a member has been expelled from the Property Redress Scheme?
We let the member know that they have been expelled, what they need to do to be re-instated and what the consequences are of continuing trading with no redress membership.
We also work closely with the National Trading Standards Estates and Letting Agent Team and local Trading Standards departments and send them a report so they can investigate:
- the business to make sure they are not trading without being a member of a redress scheme, which will result in a fine of up to £5000.00 for each offence
- the reasons and extent of the poor practice and what measures need to be taken
How often are agents expelled from the Property Redress Scheme?
Fortunately, agents who find themselves being expelled from the PRS are in the minority and most decisions are settled within the correct timescales. This results in more than 90% of consumers receiving their full award, financial and/or non-financial.
But ultimately, we can cancel an agent’s membership where they do not settle an award. Last year 61 agencies were expelled, which was more than a 32% increase from 2021. This may reflect the current economy but also highlights the quality of our compliance process.
Even with our increasing membership numbers, which rose by six per cent in 2022, the average rate of complaints for each member has remained at a little over 10%. Complaints raised did increase throughout the year by an average of 6.8% compared to 2021, and by December 2022 we were dealing with over 30% more cases than at the start of the year. Around 50% of these were successfully resolved at the informal early resolution stage.
Reflecting on the reasons for this, Sean Hooker, Head of Redress at the Property Redress Scheme said:
“It is interesting that the rate of complaints increased so significantly as the year went on. In my view this reflects the changing economic situation and growing uncertainty in the minds of consumers. This sentiment was also captured in our agent survey - 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, 70% of agents said their opinions had changed since the start of the year, with many citing ‘large rent increases’, the rising cost of living and supply and demand issues as the main reasons for this.”
For the latest complaints statistics from the Property Redress Scheme, as well as the thoughts and opinions of over 3,000 landlords and agents in the results of our sentiment survey 2022, read our interactive annual report.
