Letting agents are being warned that if they have not joined one of the compulsory redress schemes, they face investigation and possible prosecution by Trading Standards.
Trading Standards can impose fines of up to £5,000 on non-compliant letting agents.
The newest of the ombudsman schemes, the Property Redress Scheme, said it is being “actively contacted” by local authorities, questioning whether lettings and property management agents in their area have joined one of the three approved schemes.
It became compulsory from October 1.
The Property Redress Scheme, which says it now has over 1,600 members, said it has received inquiries from Norfolk and Staffordshire county councils and the London Borough of Newham.
Councils such as Hartlepool Borough and Plymouth City have also written to their agents warning them of their obligations under the new legislation.
Indications of local Trading Standards taking an interest in letting agents’ compliance come as the Department for Communities and Local Government provides guidance on which types of agents are legally required to join a consumer redress scheme.
The new guidance spells out that passive intermediaries – ie, online services that simply provide an advertising platform for landlords and tenants to contact each other – do not have to join a redress scheme.
Also exempt from the requirement are “mates” – ie, landlords who look after other landlords’ properties while they are away and do not get paid for it.
There is a similar exemption for family and friends – for example, dads who look after a daughter’s rental property, or a friend who looks after a property on behalf of a landlord – provided they do not get paid.
However, while “thank you gifts” are acceptable and do not remove the exemption, it is not clear how generous a “thank you” could be.