New Tenancy Mediation Service Launches from the Property Redress Scheme
The Property Redress Scheme (PRS) has launched a new tenancy mediation service aimed at resolving disputes between landlords and tenants without the need to go to court.
The Property Redress Scheme says that, although it has been planning to introduce the tenancy mediation service anyway, it has brought forward the launch of the scheme. This will enable it to help to mediate in any landlord-tenant problems that arise as a result of the current Covid-19 coronavirus situation.
Back in March the Government suggested that landlords whose tenants are suffering financial problems as a result of Covid-19 should try to come to some agreement over paying the rent. It also introduced measures that meant landlords who are experiencing problems with their tenants cannot apply to court to evict them for at least three months. However, the rent still remains payable and some experts suggest this could lead to more landlord-tenant disputes as a result. So, the Property Redress Scheme’s new tenancy mediation service could be particularly timely in the current crisis.
In addition to the Covid-19 crisis, new measures currently being considered by the Government on pre-action protocols before evictions may provide more need for mediation services like this in future.
How the Property Redress Scheme Tenancy Mediation Service Works
The PRS’s tenancy mediation service is available to help resolve disputes between residential and commercial landlords and tenants relating to the payment of rent or other tenancy issues. It can also assist the parties to bring an end to the tenancy without a formal eviction process.
The service works by providing an impartial person to mediate between the parties. The process is started by the landlord, who also pays the fees for the service. The mediation is conducted primarily by phone and successful mediation requires both parties to agree to mediate and be reasonable.
The Property Redress Scheme explain that their service operates through three steps:
Step 1: Instruction
The landlord contacts the PRS and requests their help. They complete a form providing information about the issues surrounding the dispute and the service discusses the matter with the landlord. The current cost of this step is £150.
The Property Redress Scheme then contact the tenant, explaining their role as mediators, and ask if the tenant is willing to mediate.
If the tenant isn’t willing to mediate, or doesn’t respond, having instructed The Property Redress Scheme indicates that, at the very least, the landlord has attempted to mediate which may be useful to them in any future legal action.
Step 2: Mediation
This involves the actual mediation itself. If the tenant is willing to mediate the mediators explain the landlord’s position to the tenant. They aim to get some form of agreement from the tenant before taking that agreement back to the landlord to see if it is acceptable to them.
This step costs £270. It allows for 1-2 hours of mediation time. If further time is needed, for example the matter is complex, an additional cost may be involved.
If no agreement is reached the matter can progress to legal action if necessary but, again, on the basis that mediation has been attempted.
Step 3: Agreement
If an agreement to resolve the situation without legal action can be reached the tenancy mediation service drafts a legally binding agreement. This is then sent to both parties to sign. This step costs £150.
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What is the Property Redress Scheme?
The Property Redress Scheme was originally established as a consumer redress or ombudsman scheme for property agents and professionals. It is a legal requirement for estate agents dealing with residential properties in the UK and letting agents or property managers in England and Wales to be members of such a scheme. The purpose of the Property Redress Scheme in that situation is to settle or resolve complaints made by consumers against their members where the member’s own internal complaints procedure has been exhausted. The new tenancy mediation service is intended to offer a specialised mediation service to landlords and tenants.
The Property Redress Scheme is a trading name of HF Resolution Ltd., which is a wholly owned subsidiary of HFIS Plc which also operates the Hamilton Fraser insurance brand. HFIS Plc is also the scheme administrator for the Mydeposits tenancy deposit protection scheme.
The PRS is authorised by the Department for Communities and Local Government (DCLG) to offer a redress scheme to lettings and property management agents and by the National Trading Standards Estate Agency Team to offer a redress scheme to estate agents. The Property Redress Scheme is approved by the Government under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015.
What does the Tenancy Mediation Service Mean for the Lettings Industry?
Presently the tenancy mediation service from the PRS is an entirely voluntary scheme. However, there is a possibility that such schemes may become mandatory in future. Even before Covid-19 the Ministry of Housing, Communities and Local Government (MHCLG) had been working on plans to introduce a pre-action protocol or alternative dispute resolution (ADR) system in the private rented sector. This could mean that mediation becomes essential before evictions, or claims for possession as they are known, can be applied for.
The Government also has plans pending to abolish the so-called ‘no fault’ Section 21 procedure which enables private landlords to repossess their properties from assured shorthold tenants without having to establish fault on the part of the tenant. If this happens, there could be more landlord-tenant disputes and so more call for mediation services of this kind.
For landlords, however, the Property Redress Scheme’s new mediation service may offer both pros and cons. Some will see the attraction of a mediation service which might, for example, obtain payment of unpaid rent or a tenant’s removal from a property without the need and expense of going to court. However, if the mediation service fails to achieve that, a landlord will still need to go to court to obtain an eviction order. Although the fact they have tried to mediate should help their case in court they will still face the costs of legal action on top of the costs of mediation.