Th
he Sco
S ottis
sh Gov
G ernment
Sec
cond Cons
sultattion on
o aN
New
Ten
nancy
y for tthe Privat
P
e Sec
ctor
Res
sponse from
f
Th
he Prop
P pertty Omb
O budsman
(M
May 2015
5)
The Property Ombudsman’s (TPO) response to the
Scottish Government’s second consultation on a
new tenancy for the private rented sector
Contents:
1.
2.
3.
4.
TPO Overview

History and Purpose

Government Approval

Approved Codes of Practice

Governance, Independence and Principles
The Property Ombudsman (TPO) Scotland

Scottish Membership

TPO Scotland

TPO Scotland Codes of Practice
TPO’s responses to the Consultation questions

Respondent Information Form

Consultation Answer Form
Closing comments
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 2 of 18
1. The Property Ombudsman Overview
History and Purpose
1.1 The Property Ombudsman (TPO) has been providing dispute resolutions to the UK
property industry for 25 years.
1.2 Originally established in 1990 as the Ombudsman for Corporate Estate Agents, in 1997
the scheme was renamed as the Ombudsman for Estate Agents, later changing to TPO
to reflect its broader jurisdiction covering disputes relating to sales, lettings, personal
search organisations, residential leasehold management, international sales, chattels
auctions and commercial property.
1.3 The Ombudsman provides redress, where appropriate, to consumers whose complaints
are supported after consideration on a case by case basis. Redress is intended to put
the consumer back into the position they were before the complaint arose. The
Ombudsman is not a regulator and does not have the authority to take regulatory or
legal action against a registered firm. The Ombudsman does not have the power to
impose fines or dictate the way in which firms conduct their business.
1.4 The Ombudsman’s resolutions are designed to achieve a full and final settlement of the
dispute and all claims made by either party. The Ombudsman can, where appropriate,
make compensatory awards in individual cases up to a maximum of £25,000 for actual
and quantifiable loss and/or for aggravation, distress and/or inconvenience caused by
the actions of a registered firm.
1.5 The Ombudsman’s decision is binding on the registered firm and, when required,
enforced through TPO’s Disciplinary and Standards Committee. However, the consumer
remains free to withdraw their complaint at any time or decline to accept the
Ombudsman’s decision leaving them free to pursue their complaint elsewhere, such as
through the courts or, when established, via the First-tier Tribunal.
1.6 The Property Ombudsman Limited and the Property Ombudsman Scotland Limited are
‘not for profit’ companies limited by guarantee. There is no cost to the consumer or the
taxpayer for TPO’s services.
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 3 of 18
Government Approval
1.7 In June 2008, TPO was the first redress scheme to gain the status of an Office of Fair
Trading (OFT) Approved Estate Agents Redress Scheme under the provisions of the
Consumers, Estate Agents and Redress Act 2007. This approval has continued
following the National Trading Standards Estate Agency Team taking over this
responsibility in 2014.
1.8 In April 2014, TPO also gained approval from the Department of Communities and Local
Government as an approved letting and managing agent redress scheme under the
provisions of the Enterprise and Regulatory Reform Act 2013 in relation to letting and
management agents operating in England.
Approved Codes of Practice
1.9 TPO’s Code of Practice for Residential Estate Agents is approved by the Trading
Standards Consumer Codes Approval Scheme (CCAS) and is followed by 13,680 estate
agent branches who are members of TPO. We believe this equates to approximately
95% of the estate agents trading in the UK, making the Code the largest consumer code
to be approved by the CCAS.
1.10
TPO’s Code of Practice for Residential Letting Agents gained CCAS approval in
October 2014, following a four year approval process originally started by the OFT. The
Code is followed by 12,964 letting agent business operating throughout the UK. We
believe this equates to approximately 85% of the letting agents trading in the UK,
making the Code the second largest to be approved by the CCAS.
1.11
TPO’s Codes of Practice are widely respected and used throughout the property
sector by other industry bodies. For example the National Association of Estate Agents
(NAEA) and the Association of Residential Letting Agents (ARLA) use TPO’s Codes as
the basis for their own judgements regarding their members conduct. In addition, TPO’s
Codes have been replicated by other trade bodies to use as their own membership
codes, for example the UK Association of Letting Agents (UKALA).
Governance, Independence and Principles
1.12
The Ombudsman and his staff are funded through an annual subscription collected
by the Board of TPO Ltd and TPO Scotland Ltd. However, it is the TPO Council, chaired
by Lord Richard Best, who appoints the Ombudsman and sets his Terms of Reference,
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 4 of 18
(i.e. how the complaint process operates). The Ombudsman is accountable to the
Council and reports directly to them. He is not accountable to the Board. The Council’s
majority is made up of non-industry members in accordance with the company’s Articles
of Association.
1.13
Agents who do not comply with the Ombudsman’s decisions or who have been
referred to TPO for other compliance related matters can be referred to the Disciplinary
and Standards Committee (DSC) who can impose sanctions on the agent or, if
necessary, expel the agent from membership. The DSC is accountable to the Council
and is made up of non-industry members with technical representation from the Board.
Serious non-compliance matters which are potentially illegal are referred to the relevant
authority (e.g. Trading Standards).
1.14
Unresolved complaints concerning TPO’s service can be referred to the Council who,
if appropriate, will ask the Independent Reviewer to conduct an internal investigation.
1.15
TPO’s Annual Report includes reports from both the DSC and the Independent
Reviewer. The DSC also issue press releases, where appropriate, to inform consumers
about agents expelled from the scheme.
1.16
TPO is a full ‘ombudsman member’ of the Ombudsman Association and the
Ombudsman sits on its Executive Committee. TPO operates in accordance with the
organisation’s principles of good governance:

Independence

Openness and transparency

Accountability

Integrity

Clarity of purpose

Effectiveness
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 5 of 18
2. The Property Ombudsman Scotland
Scottish Membership
2.1 The Scottish Government’s previous consultation in relation to the Housing (Scotland)
Bill estimated that there were 719 letting agent businesses (branches) in operation,
accounting for about 50% (150,000) of annual lettings.
2.2 As of 30 April 2015, there were 507 Scottish agents registered with TPO which
represents a significant proportion of the estimated total.
TPO Scotland Limited
2.3 Given TPO’s significant membership levels in relation to agents trading in Scotland, TPO
established The Property Ombudsman Scotland Limited (TPO Scotland).
2.4 TPO Scotland operates on a similar basis as TPO and will be subject to the same
governance arrangements as previously set out in Section 1 of this response.
TPO Scottish Codes of Practice
2.5 TPO has released two Codes of Practice specifically for the Scottish lettings and sales
sectors. Both codes came into force on 1 March 2015 and apply to all letting and sales
agents operating in Scotland.
2.6 Both Codes were drafted in consultation with leading industry heads and consumer
group representation, with a representative from the Scottish Government acting as an
observer.
2.7 The TPO’s Codes of Practice for Lettings and Estate Agents in Scotland have received
independent CCAS approval and are subject to ongoing monitoring and auditing to
maintain that approval.
2.8 Given that a significant proportion of Scottish agents are obliged to follow the new TPO
Codes, we hope that the Scottish Government will consider the TPO Letting Code in
relation to the mandatory code provided for in the Housing (Scotland) Act 2014.
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
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CONSULTATION ANSWER FORM
Question 1a: Do you agree that there should be an initial tenancy period during which a
tenant and landlord would be unable to give notice unless one of the specified circumstances
existed?
Yes
X
No
Don’t know
Please explain your answer.
A relatively protected initial period will provide a degree of security for both the
tenant and the landlord.
Question 1b: Do you agree that after the initial period a tenant or landlord may serve notice
at any time with the relevant notice periods?
Yes
X
No
Don’t know
Please explain your answer.
No comments
Question 2: Do you agree that Notice to Quit and Notice of Proceedings should be
combined into one Notice to Leave?
Yes
X
No
Don’t know
Please explain your answer.
Combining the two Notices into one Notice to Leave will aid mutual understanding
of the new system and provide clarity, especially for those parties with less
understanding of current system.
Question 3: Do you agree with the proposed notice periods a landlord should give a tenant?
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 9 of 18
Yes
X
No
Don’t know
Please explain your answer.
This seems a reasonable compromise, and rightly provides longer term tenants
with a suitable notice period to plan and arrange their move.
Question 4a: Do you agree that a landlord may serve a Notice to Leave when a tenant has
been in rent arrears for two consecutive months?
Yes
X
No
Don’t know
Please explain your answer.
In order to encourage private landlords to provide properties to let, safeguards
such as this must be put in place.
Question 4b: Do you agree that when a tenant has reached three consecutive months of
rent arrears, a landlord should be able to refer a case to the First-tier Tribunal?
Yes
X
No
Don’t know
Please explain your answer.
The First-tier Tribunal must look to provide fast track decisions in cases involving
rent arrears in order to provide landlords with the confidence that they can meet
their own financial obligations, and in particular, any mortgages attached to the
property concerned.
Question 5a: Do you agree that the list of repossession grounds now covers all reasonable
circumstances where a landlord may wish to recover possession?
Yes
X
No
Don’t know
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 10 of 18
Please explain your answer.
Our comments on specific grounds are set out below. We would also recommend
that future guidance for both landlords and tenants on each of these grounds is
provided to ensure a consistent understanding and interpretation. TPO Scotland
would be happy to provide input to this process and, thereafter, use our network of
Scottish letting agents to distribute the finalised guidance.
Question 5b: Do you agree that the First-tier Tribunal should have an element of discretion
in grounds 6, 7 and 8?
Yes
X
No
Don’t know
Please explain your answer.
It is vital that the First-tier Tribunal is granted a degree of discretion on a case by
case basis in order to take into account the specific circumstances of the case at
hand.
Question 6: From the details provided, do you agree that each of the following repossession
grounds will work effectively?
Ground 1: The landlord is selling the home.
Yes
X
No
Don’t know
Please explain your answer.
The evidence provided by the landlord will be vital to prove whether they are
actively trying to sell the property. Market appraisals and valuations only provide
an indication that consideration has been given to selling. However, evidence such
as signed agency agreements, adverts for the property and other similar actions
indicate active marketing has commenced.
Ground 2: The mortgage lender is selling the home because the landlord has broken the
loan’s conditions.
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 11 of 18
Yes
X
No
Don’t know
Please explain your answer.
No comments.
Ground 3: The landlord or a family member of the landlord wants to move into the property
as their principal home.
Yes
X
No
Don’t know
Please explain your answer.
Defining a ‘family member’ in accordance with section 128 of the Housing
(Scotland) Act 2006 will provide the basis for clear and consistent decisions.
Ground 4: Refurbishment.
Yes
X
No
Don’t know
Please explain your answer.
Guidance on what constitutes substantial works and levels of reasonable removal
costs should be provided to avoid potential disputes from arising.
Ground 5: Change of business use, e.g. from home to shop (from residential to nonresidential).
Yes
X
No
Don’t know
Please explain your answer.
No comments.
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 12 of 18
Ground 6: The tenant has failed to pay the full rent over three consecutive months.
Yes
X
No
Don’t know
Please explain your answer.
Once again, clear guidance (especially for landlords) will be required to ensure the
correct procedure is followed.
Ground 7: The tenant has displayed antisocial behaviour.
Yes
X
No
Don’t know
Please explain your answer.
No comments.
Ground 8: The tenant has otherwise breached the clauses of their tenancy agreement.
Yes
X
No
Don’t know
Please explain your answer.
TPO welcomes the Scottish Government’s decision to consult stakeholders on
which clauses will constitute mandatory and discretionary grounds and looks
forward to be involved in those discussions.
Ground 9: Abandonment.
Yes
X
No
Don’t know
Please explain your answer.
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 13 of 18
No comments.
Ground 10: The property was let to the tenant because they were employed by the landlord,
and the tenant is no longer employed by the landlord.
Yes
X
No
Don’t know
Please explain your answer.
No comments.
Ground 11: The property is normally needed to house a full-time religious worker of a
religious denomination, and is required for this purpose.
Yes
X
No
Don’t know
Please explain your answer.
It is noted that this will be a similar provision to Ground 5, Schedule 5 of the
Housing (Scotland) Act 1988.
Question 7a: Do you agree that rent reviews should take place no more than once a year?
Yes
X
No
Don’t know
Please explain your answer.
To ensure fairness, rent reviews should be linked to market conditions with the
ability to increase or, where appropriate, decrease based on market conditions.
Upward only rent reviews could be potentially unfair especially where a tenant is
locked into a tenancy agreement. Accordingly, market appraisals from at least
three professionals should be sought by a landlord in order to propose the new
level of rent for the property.
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 14 of 18
Question 7b: Do you agree that a tenant should receive 12 weeks’ notice in advance of a
change in the rent?
Yes
X
No
Don’t know
Please explain your answer.
Tenants must be provided with sufficient notice of a rent review and also presented
with the proposed new rent level as soon as possible to enable them to budget
accordingly.
Question 7c: Do you agree that tenants should be able to refer what they regard as
unreasonable rent increases for adjudication?
Yes
X
No
Don’t know
Please explain your answer.
It is essential that tenants have the right to challenge perceived unreasonable rent
increases.
Question 7d: Do you think there is a role for the additional regulation of area-based rent
limits?
Yes
No
Don’t know
X
Please explain your answer, setting out what you view as the advantages and disadvantages
of such an approach.
There may be a role, provided it is evident from the cases considered, that a trend
exists in an area where area-based rent controls are required.
Question 7e: If we were to legislate for this proposal, what types of evidence should local
authorities have to present to Ministers when applying to designate an area as a ‘rent
pressure area’?
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 15 of 18
Please explain your answer.
Evidence in the form of cases considered by the First-tier Tribunal and, where
appropriate, by TPO Scotland should be included alongside appropriate
professional opinion, backed by suitable evidence on rental levels specific to the
area concerned.
Question 8: Do you have any comments on the partial Equality Impact Assessment?
Please explain your answer.
No comments.
Question 9: Do you have any comments on the partial Business and Regulatory Impact
Assessment?
Please explain your answer.
No comments.
TPO response to the Scottish Government’s consultation on a new tenancy for the private rented sector
November 2014
Page 16 of 18
4. Closing Co
omments
s
4.1 The
e commentts made in
n the consu
ultation response build
d on, and should be read in
con
njunction with, the com
mments TPO
O previously provided in its respoonse to the Scottish
Go
overnment’ss first consultation on a new tenancy for the private sectoor.
4.2 TPO Scotland
d is supporttive by the Scottish Go
overnment’s
s stated aim
m of improv
ving and
owing the prrivate rente
ed sector byy simplifying
g tenancy arrangementts whilst en
nabling a
gro
mo
ore effective
e regulatory
y system, ttargeting tougher enfo
orcement acction and attracting
a
new
w investment.
4.3 Givven TPO an
nd TPO Sco
otland’s ext ensive expe
erience of lettings issuues within Scotland,
S
its prominent position in
n providing
g dispute resolution
r
to the lettinngs sector and its
ottish Code
es of Prac
ctice provid
ding a me
easurable and widelyy accepted
d set of
Sco
sta
andards, we
e would be
b pleased to continue our en
ngagement with the Scottish
Go
overnment th
hroughout its consultattion and imp
plementatio
on processees.
Christopher J Hamer
Pro
operty Omb
budsman
The Pro
operty Omb
budsman
Milford House
43–55 M
Milford Stre
eet
Salisbury
Wiltshirre
SP1 2B
BP
Tel: 01722 430027
Fax: 01722
2 332296
Email: chris
stopher.ham
mer@tpos.c
co.uk
Twitter: @T
TPOmb
The Omb
budsman’s Te
erms of Refere
ence, the Cod
des of Practic
ce, Consumer Guides and other docume
ents about
the opera
ation of the sccheme are ava
ailable on TPO
O’s website (w
www.tpos.co.uk), together w
with previous annual
a
and
interim re
eports, further explanation of
o governance arrangements and a full list of registeredd firms.
TPO response to the Sc
cottish Governm
ment’s consulttation on a new
w tenancy for the private rentted sector
er 2014
ge 17 of 18
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