My Lords, the private rented sector now represents the second most common form of tenure in England, providing for 4 million households. We believe that there are more than 3 million residential leasehold properties in England. I declare at this point that I am both a leaseholder and a landlord.
Approximately one-third of letting agents and a minority of property managers are not members of a redress scheme. This means that people using these services do not have ready access to an independent complaints procedure if they receive poor service from their agent. The majority of letting agents and property managers provide a good service. However, for people living in or owning property in the private rented and leasehold sectors, who rely on these agents, the inability to seek redress can have a significantly detrimental impact on their quality of life.
The Enterprise and Regulatory Reform Act 2013 gave the Secretary of State the power to require all residential letting agents and property managers in England to be members of a government-approved redress scheme. The first order, laid before this House on 25 October 2013, gave the Secretary of State the power to approve redress schemes and to set out requirements for them. As stated when that order was debated in November, a second order was to be made, making the requirement mandatory, once the Secretary of State was satisfied that all agents were able to join a redress scheme. The Secretary of State is satisfied that we have now reached that stage and we propose that the duty to belong to an approved redress scheme will come into force on 1 October this year.
In April 2014, the Secretary of State approved three schemes: the Property Ombudsman, the Ombudsman Services Property and the Property Redress Scheme. These three schemes provide an independent, transparent and competitive source of redress for landlords, leaseholders and tenants. Furthermore, the performance of these redress schemes will be monitored, ensuring that a high level of service and standards is maintained.
The redress schemes will have a range of options to tackle poor service by letting agencies. They will be able to require apologies, explanations, compensation, making good and even expulsion from the scheme. To ensure that all letting agents join a scheme, councils will be able to fine agents more than once for failing to join one. Yet the order is fair, in that should an agent or property manager feel that the fine is wrong or unreasonable, they will be able to appeal to the First-tier Tribunal.
We recognise that enforcing the requirement for membership of a redress scheme will entail a new burden for local authorities, so we will make additional funding available. Furthermore, councils will be able to retain the fine, enabling the proceeds from tackling cowboy agents to be used to tackle yet more rogue agents, where they exist, thus continually driving up standards in the industry. Councils will also be assisted by the redress schemes working together and with trading standards, minimising the capacity for rogue letting agents and property managers to hide.
The definition of what constitutes letting agent and property management work is very broad. We have therefore provided some exemptions where there is already a suitable mechanism for customers to seek redress or there is existing regulation. For example, universities helping to find student accommodation or operating halls of residence, legal professionals, managers of refuge homes and mortgage receivers are all engaged in work that could be covered by this order but are subject to existing regulation.
The order will bring a source of redress to the individuals who use around 3,000 letting agents and property managers. It will complement and strengthen existing provision in both the leasehold and private rented sectors. It will also complement the requirement that we are introducing through the Consumer Rights Bill for letting agents to publicise their fees both in their offices and on their website. This will encourage competitive fees, deterring agents from charging tenants and landlords for the same service.
Overall, we want to raise standards for landlords, tenants and leaseholders. Mandatory redress and transparent fees will go a long way to achieving this. I commend the order to the Committee.