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My Lords, as part of the Renters’ Rights Act, a transforming set of reforms to bring more protections and security for tenants in the private rented sector, we are introducing a new landlord redress scheme. The service will resolve issues for tenants where their landlord has failed to address a legitimate complaint. It will provide impartial and fair resolution, giving tenants access to redress outside the court.
The Government recognise that most landlords are looking to provide a good service to their tenants. The new landlord redress scheme will support landlords to do just that, by providing guidance and tools to help them handle complaints locally and early in order to prevent escalation. This new service will close a key gap in housing redress, providing private rented sector tenants with enhanced consumer protection rights which tenants in the social rented sector already benefit from. It will help to raise standards in the sector by equipping landlords with tools and information on what best practice looks like.
These regulations are the first legislative step towards establishing landlord redress for the private rented sector. They set out the framework for how a mandatory private landlord redress scheme may be approved or designated. An approved scheme would be designed and run by an independent provider, while a designated scheme would be designed and administered by, or on behalf of, the Secretary of State. The regulations also set out how such a scheme may be amended, allowing the service to adapt to emerging changes in the sector, and provide for continuity of redress by ensuring an orderly transition if a scheme closes or approval is withdrawn.
The regulations do not themselves approve or designate a redress scheme, nor do they impose an immediate requirement on landlords to join one. Rather, they set out the statutory criteria that any future scheme must meet, including requirements relating to governance, complaint handling, types of redress and enforcement of decisions, information sharing, reporting and review. They provide clarity and assurance for the sector on what can be expected of the service once it is established and in operation.
This framework is essential because a scheme cannot be approved or designated until these conditions are in force. It therefore enables the next stage of implementation: the establishment of the private rented sector landlord ombudsman scheme and, in due course, further regulations specifying which landlords will need to become members of a scheme and when such a requirement will come into effect. Subject to parliamentary approval, we will turn to progress the design of the scheme and ensure that it meets the robust conditions set out in these regulations. The scheme will be designated once the Secretary of State is content that it satisfies the approval conditions.
The intention is that the Housing Ombudsman Service, which provides redress to tenants in the social rented sector, will deliver the new private rented sector landlord ombudsman service, promoting consistency in redress across the sectors. We will continue work to implement the service, including developing the further regulations required and setting up the service. We will give landlords sufficient notice and clear guidance before any future requirement to join the scheme comes into force.
To conclude, these regulations put in place the minimum standards and safeguards that a private landlord redress scheme must meet, paving the way to establishing the new service and securing access to fair and binding redress for private tenants. I beg to move.
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My Lords, I thank the Minister for explaining this SI. To be clear, we support the principle that tenants should have access to effective routes of redress when things go wrong. The overwhelming majority of disputes between landlords and tenants should not require lengthy, costly and stressful court proceedings when there is a fair and independent alternative. That is why the previous Conservative Government brought forward our own proposals for a private rented sector ombudsman.
The question is whether this scheme is proportionate and workable in practice. This needs to be done in the context of a housing crisis, with too few homes available for rent. We need a private rented sector that works for tenants but also for responsible landlords who provide those essential homes for millions of people across the country. A successful regulatory framework should protect tenants from poor practice without driving landlords out of the market or imposing burdens that ultimately increase costs for renters. I recognise the Government’s objective in establishing a mandatory landlord redress scheme, as there is a clear logic in ensuring that tenants have access to a system capable of providing independent, binding resolutions where complaints cannot be resolved directly.
We do, however, have a number of concerns. How will the interaction between landlords and managing agents be addressed? Many landlords employ agents to manage their properties; those agents are already required to belong to a redress scheme. Under these regulations, landlords will also be required to join such a scheme, which we raised during the passage of the Bill. Can the Minister explain how the Government intend to avoid duplication where a complaint relates to actions involving both a landlord and an agent? If a tenant complains about property management repairs, communication failures or other issues where responsibilities overlap, how will the scheme determine who is accountable? What safeguards exist to prevent multiple investigations into the same complaint and conflicting outcomes being reached by different bodies?
The Government have described this scheme as a complementary measure, sitting alongside local authority enforcement powers, licensing regimes, the courts and the new landlord database, yet many landlords look at this growing list of registration requirements, fees, compliance obligations and potentially significant fines—not to mention court delays—and wonder whether it is worth the candle to carry on renting out a property. What work has been undertaken to ensure administrative alignment between the redress scheme, the landlord database and local authority licensing schemes? In particular, what steps have been taken to prevent landlords from being required to pay multiple fees for systems and fill out multiple forms that, from their perspective, may appear to serve similar or overlapping purposes?
The private rented sector is already facing significant pressures. Landlords face rising costs, increasing regulatory obligations and continuing uncertainty about future reforms. In many parts of the country, they are leaving the sector altogether. A recent article for Landlord Knowledge estimated that there will be 220,000 fewer rented homes available by the end of this year; that is around 5% of the market. With Zoopla estimating that in 2024 there were 21 people chasing every rental home, the last thing prospective tenants need is fewer homes for rent.
I turn to the Government’s preference for a single approved redress scheme. There is clearly a need for balance: a single scheme would reduce confusion and increase consistency. However, without competitive pressure, there is less incentive to innovate, to improve customer service and to control costs. The Government have indicated that further schemes could be approved if necessary. Can the Minister elaborate on the circumstances in which that power might be exercised? What performance measures will be used to assess whether the designated scheme is delivering an acceptable service to both tenants and landlords? I would also welcome further clarification on the £25,000 compensation cap.
Finally, I will make a broader point. The vast majority of landlords are responsible individuals who provide good-quality accommodation and comply with their obligations. Public policy should be directed towards addressing poor practice and rogue operators, without creating a system that treats each landlord as a potential offender. The success of this scheme should be measured by whether it resolves disputes quickly, fairly and proportionately, while supporting a healthy and functioning sector. Its success should not be measured by the volume of complaints it processes or the number of enforcement actions it takes.
We support the principle of effective redress and recognise the need for tenants to have access to independent dispute resolution, but it is essential that this scheme is practical, proportionate and properly integrated into existing regulatory structures. As I said earlier, there is a shortage of rental homes. How will the Government ensure that this does not further decline? I hope that the Minister will provide reassurance on duplication, costs, administrative burdens and the interactions of the scheme with the wider reforms affecting the private rented sector. I look forward to her response.