Property News > Reminder issued by property ombudsman after agent fined by local council

Reminder issued by property ombudsman after agent fined by local council

All agents have been issued with a reminder from the Property Ombudsman to ensure all work undertaken is covered by their redress membership.

The warning comes after a lettings agent was fined £3,000 by their local authority as their residential leasehold management work was not covered by their redress membership, despite being a member of The Property Ombudsman for Sales and Lettings.

Concerns had been raised by a tenant at a residential block of flats, which had been managed by the agent for two years, and following investigation the local authority discovered that the membership held by the agent covered it for sales and lettings, commercial sales and lettings and some types of property management, but not for residential leasehold management, which would have required additional cover.

Following the investigation, the company was found to be in breach of its legal obligations, and was subsequently issued with a notice of intent by the local authority. 

The agent contested the notice, taking its appeal to the first-tier tribunal. There, the conclusion reached was that the evidence was insufficient to suggest that the membership of TPO held by the agent was inadequate. The local authority’s right to appeal the decision was then also refused by the first-tier tribunal.

The authority then took its application direct to the upper tribunal, and there it was decided that there was in fact sufficient evidence that could allow for the property management activities of the agent to be assessed, and that this should be addressed and determined. 

Finally, the judge concluded that “a company must be a member of a redress scheme for all works in which they are engaged, otherwise the whole process of a redress scheme is undermined”

‘Local Authorities have a duty to act where agents fail to register with an approved redress scheme, or fail to have the correct membership,’ said Property Ombudsman, Katrine Sporle.

‘In this case, the agent believed they were covered for redress by their TPO membership for Sales and Lettings, and as a result did not receive the maximum fine of £5,000,’ she explained.

‘However, this should act as a timely warning to all agents to ensure you have appropriate redress membership to cover the work you carry out,’ she added.

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